CHAPTER 4: ETHICAL AND SOCIAL ISSUES IN o What values should be preserved in an

INFORMATION SYSTEMS information and knowledge-based

society?
4-1 What ethical, social, and political issues are o Which institutions should we protect from
issued by information systems? violation?
Ethics o Which cultural values and practices does
o It refers to the principles of right and wrong the new information technology support?
that individuals, acting as free moral agents,
use to make choices to guide their behaviors. Key Technology Trends that Raise Ethical
o Information systems raise new ethical Issues
questions for both individuals and societies 1. Computing power doubles every 18
because they create opportunities for intense months
social change and, thus, threaten existing o The doubling of computing power every
distributions of power, money, rights, and 18 months has made it possible for most
obligations. organizations to use information systems
Ethical Issues in Information Systems for their core production processes.
a) Appropriate use of customer information. o As a result, our dependence on systems
b) The protection of personal privacy. and our vulnerability to system errors and
c) The protection of intellectual property. poor data quality have increased.
d) Establishing accountability for the o More organizations depend on computer
consequences of information systems. systems for critical operations and
e) Setting standards to safeguard system quality. become more vulnerable to system
failures.
A Model for Thinking About Ethical, Social, and 2. Data storage costs rapidly decline
Political Issues o It has been responsible for the multiplying
databases on individuals—employees,
Ethical, social, and political issues are closely
customers, and potential customers—
linked.
maintained by private and public
organizations.
o These advances in data storage have
made the routine violation of individual
privacy both inexpensive and effective.
o Organizations can easily maintain
detailed databases on individuals. There
are no limits on the data collected about
you.
3. Data analysis advances
o It heightens ethical concerns because
companies and government agencies can
find out highly detailed personal
information about individuals.
o Companies can analyze vast quantities of
data gathered on individuals to develop
The introduction of new information technology has detailed profiles of individual behavior.
a ripple effect, raising new ethical, social, and Large-scale population surveillance is
political issues that must be dealt with on the enabled.
individual, social, and political (polity) levels. 4. Networking advances (the Internet)
o It promises to reduce greatly the costs of
Five Moral Dimensions of the Information Age moving and accessing large quantities of
data and open the possibility of mining
1. Information Rights and Obligations large pools of data remotely by using
o What information rights do individuals and small desktop machines, mobile devices,
organizations possess with respect to and cloud servers, permitting an invasion
themselves? What can they protect? of privacy on a scale and with a precision
2. Property Rights and Obligations heretofore unimaginable.
o How will traditional intellectual property o The cost of moving data and making it
rights be protected in a digital society in accessible from anywhere falls
which tracing and accounting for exponentially. Access to data becomes
ownership are difficult and ignoring such more difficult to control.
property rights is so easy? 5. Mobile device growth impact
3. Accountability and Control o Individual cell phones may be tracked
o Who can and will be held accountable without user consent or knowledge. The
and liable for the harm done to individual always-on device becomes a tether.
and collective information and property
rights? Advances in information technology facilitate the
4. System Quality invasion of privacy.
o What standards of data and system Profiling
quality should we demand to protect o The use of computers to combine data from
individual rights and the safety of society? multiple sources and create digital dossiers of
5. Quality of Life detailed information on individuals.
Examples:
a) DoubleCLick (owned by Google)
  It is an Internet advertising broker, to o It extends the concept of responsibility
track the activities of their visitors in further to the area of laws.
exchange for revenue from o It is a feature of political systems in which a
advertisements based on visitor body of laws is in place that permits
information DoubleClick gathers. individuals to recover the damages done to
 It uses this information to create a them by other actors, systems, or
profile of each online visitor, adding organizations.
more detail to the profile as the visitor Due Process
accesses an associated DoubleClick o It is a related feature of law-governed
site. societies and is a process in which laws are
 It creates a detailed dossier of a known and understood, and ability exists to
person’s spending and computing appeal to higher authorities to ensure that
habits on the web that is sold to the laws are applied correctly.
companies to help them target their
web ads more precisely. First, information technologies are filtered through
b) LexisNexis Risk Solutions (formerly social institutions, organizations, and individuals.
ChoicePoint)
 It gathers data from police, criminal, Second, responsibility for the consequences of
and motor vehicle records, credit and technology falls clearly on the institutions,
employment histories, current and organizations, and individual managers who
previous addresses, professional choose to use the technology.
licenses, and insurance claims to Third, in an ethical, political society, individuals and
assemble and maintain dossiers on others can recover damages done to them through
almost every adult in the United States. a set of laws characterized by due process.
 The company sells this personal
information to businesses and Ethical Analysis
government agencies.
 Demand for personal data is so 1. Identify and describe the facts clearly.
enormous that data broker businesses o Find out who did what to whom and
such as Risk Solutions are flourishing. where, when, and how. In many
instances, you will be surprised at the
NORA (Nonobvious Relationship Awareness) errors in the initially reported facts, and
o It is a data analysis technology that has given often you will find that simply getting the
both the government and the private sector facts straight helps define the solution.
even more powerful profiling capabilities. o It also helps to get the opposing parties
o It can take information about people from involved in an ethical dilemma to agree on
many disparate sources, such as employment the facts.
applications, telephone records, customer 2. Define the conflict or dilemma and identify
listings, and wanted lists, and correlate the higher-order values involved.
relationships to find obscure connections that o Ethical, social, and political issues always
might help identify criminals or terrorists. reference higher values.
o It scans data and extracts information as the o The parties to a dispute all claim to be
data are being generated. pursuing higher values (e.g., freedom,
o It can take information about people from privacy, protection of property, and the
disparate sources and find obscure, free enterprise system).
nonobvious relationships. o Typically, an ethical issue involves a
dilemma: two diametrically opposed
4-2 What are specific principles for conduct can courses of action that support worthwhile
be used to guide ethical decisions? values.
Ethics 3. Identify the stakeholders.
o It is a concern of humans who have freedom o Every ethical, social, and political issue
of choice. has stakeholders: players in the game
o It is about individual choice. who have an interest in the outcome, who
have invested in the situation, and usually
Basic Concepts: Responsibility, Accountability, who have vocal opinions.
and Liability o Find out the identity of these groups and
what they want. This will be useful later
Ethical Choices when designing a solution.
o Decisions made by individuals who are 4. Identify the options that you can
responsible for the consequences of their reasonably take.
actions. o You may find that none of the options
Responsibility satisfy all the interests involved but that
o A key element of ethical action. some options do a better job than others.
o It means that you accept the potential costs, o Sometimes arriving at a good or ethical
duties, and obligations for the decisions you solution may not always be a balancing of
make. consequences to stakeholders.
Accountability 5. Identify the potential consequences of
o A feature of systems and social institutions. your options.
o It means that mechanisms are in place to o Some options may be ethically correct but
determine who took action and who is disastrous from other points of view.
responsible. o Other options may work in one instance
Liability but not in similar instances.
 o Always ask yourself, “What if I choose this 4-3 Why do contemporary information systems
option consistently over time? technology and the Internet pose challenges to
the protection of individual privacy and
Candidate Ethical Principles intellectual property?
1. Golden Rule Five Moral Dimensions of the Information Age
o Do unto others as you would have them A. Information Rights: Privacy and Freedom in
do unto you. the Internet Age
o Putting yourself in the place of others and
thinking of yourself as the object of the Privacy
decision, can help you think about o The claim of individuals to be left alone, free
fairness in decision making. from surveillance or interference from other
individuals or organizations, including the
state.
2. Immanuel Kant’s Categorical Imperative o Claims to privacy are also involved at the
o If an action is not right for everyone to workplace. Millions of employees are subject
take, it is not right for anyone. to digital and other forms of high-tech
o Ask yourself, “If everyone did this, could surveillance. Information technology and
the organization, or society, survive?” systems threaten individual claims to privacy
3. Slippery Slope Rule by making the invasion of privacy cheap,
o If an action cannot be taken repeatedly, it profitable, and effective.
is not right to take at all. Fair Information Practices (FIP)
o An action may bring about a small change  Most American and European privacy law is
now that is acceptable, but if it is based on a regime called Fair Information
repeated, it would bring unacceptable Practices (FIP) first set forth in a report
changes in the long run. written in 1973 by a federal government
o In the vernacular, it might be stated as advisory committee and updated most
“once started down a slippery path, you recently in 2010 to take into account new
may not be able to stop.” privacy-invading technology.
4. Utilitarian Principle  It is a set of principles governing the collection
o Take the action that achieves the higher and use of information about individuals.
or greater value.  FIP principles are based on the notion of a
o This rule assumes you can prioritize mutuality of interest between the record holder
values in a rank order and understand the and the individual.
consequences of various courses of  The individual has an interest in engaging in a
action. transaction, and the record keeper—usually a
5. Risk Aversion Principle business or government agency—requires
o Take the action that produces the least information about the individual to support the
harm or the least potential cost. transaction. After information is gathered, the
o Some actions have extremely high failure individual maintains an interest in the record,
costs of very low probability or extremely and the record may not be used to support
high failure costs of moderate probability. other activities without the individual’s
o Avoid actions which have extremely high consent.
 In 1998, the Federal Trade Commission
failure costs; focus on reducing the
(FTC) restated and extended the original FIP
probability of accidents occurring.
to provide guidelines for protecting online
6. Ethical No-Free-Lunch Rule
privacy.
o Assume that virtually all tangible and
intangible objects are owned by someone Federal Trade Commission Fair Information
else unless there is a specific declaration Practice Principles
otherwise. a) Notice/Awareness (core principle)
o If something someone else has created is o Websites must disclose their information
useful to you, it has value, and you should practices before collecting data.
assume the creator wants compensation o Includes identification of collector; uses of
for this work. data; other recipients of data; nature of
collection (active/ inactive); voluntary or
Professional Codes of Conduct required status; consequences of refusal; and
o These are promulgated by associations of steps taken to protect confidentiality, integrity,
professionals such as the American Medical and quality of the data.
Association (AMA), the American Bar b) Choice/Consent (core principle)
Association (ABA), the Association of o A choice regime must be in place allowing
Information Technology Professionals (AITP), consumers to choose how their
and the Association for Computing Machinery information will be used for secondary
(ACM). purposes other than supporting the
o These professional groups take responsibility transaction, including internal use and
for the partial regulation of their professions by transfer to third parties.
determining entrance qualifications and c) Access/Participation
competence. o Consumers should be able to review and
contest the accuracy and completeness of
Codes of Ethics
data collected about them in a timely,
o Promises by professions to regulate
inexpensive process.
themselves in the general interest of society.
d) Security
o Data collectors must take responsible
steps to ensure that consumer information
 is accurate and secure from unauthorized o Small text files deposited on a computer
use. hard drive when a user visits websites.
e) Enforcement o It identifies the visitor’s web browser
o A mechanism must be in place to enforce software and track visits to the website.
FIP principles. This can involve self- When the visitor returns to a site that has
regulation, legislation giving consumers stored a cookie, the website software
legal remedies for violations, or federal searches the visitor’s computer, finds the
statutes and regulations. cookie, and knows what that person has
Children’s Online Privacy Protection Act (COPPA) done in the past. It may also update the
 Requiring websites to obtain parental cookie, depending on the activity during
permission before collecting information on the visit. In this way, the site can
children under the age of 13. customize its content for each visitor’s
Health Insurance Portability and Accountability Act interests.
(HIPAA) of 1996 o So-called Super Cookies/Flash cookies
 Includes privacy protection for medical  It cannot be easily deleted and can
records. be installed whenever a person
 The law gives patients access to their clicks a Flash video.
personal medical records that healthcare  Flash uses these so-called local
providers, hospitals, and health insurers shared object files to play videos
maintain and the right to authorize how and puts them on the user’s
protected information about themselves can computer without his or her consent.
be used or disclosed. b) Web Beacons/Web Bugs (Tracking Files)
o Marketers use web beacons as another
The European Directive on Data Protection tool to monitor online behavior.
 European countries do not allow businesses o These are tiny software programs that
to use personally identifiable information keep a record of users’ online
without consumer’s prior consent. clickstreams.
 Customers must provide their informed o They report this data back to whomever
consent before any company can legally use
owns the tracking file invisibly embedded
data about them, and they have the right to
in e-mail messages and web pages that
access that information, correct it, and request
are designed to monitor the behavior of
that no further data be collected.
the user visiting a website or sending e-
 Informed consent: consent given with
mail.
knowledge of all the facts needed to make
o These are placed on popular websites by
a rational decision.
third-party firms who pay the websites a
a) Opt-out: a model of informed
fee for access to their audience.
consent permits the collection of
o Only one site, Wikipedia, had no tracking
personal information until the
consumer specifically requests the files; While the biggest trackers were
data not to be collected. Google, Microsoft, and Quantcast, all of
b) Opt-in: a model of informed whom are in the business of selling ads to
consent in which a business is advertising firms and marketers.
prohibited from collecting any c) Spyware
personal information unless the o It can secretly install itself on an Internet
consumer specifically takes action user’s computer by piggybacking on
to approve information collection larger applications.
and use. Here, the default option is o Once installed, the spyware calls out to
no collection of user information. websites to send banner ads and other
 The European Parliament (2009) passed new unsolicited material to the user, and it can
rules governing the use of third-party cookies report the user’s movements on the
for behavioral tracking purposes and required Internet to other computers.
website visitors to give explicit consent to be Most experts believe that Google possesses the
tracked by cookies. Websites are required to largest collection of personal information in the
have highly visible warnings on their pages if world—more data on more people than any
third-party cookies are being used. government agency. The nearest competitor is
 The Directive developed a safe harbor Facebook.
transborder data framework for non-European  After Google acquired the advertising
firms that allowed them to move data across network DoubleClick in 2007, Google began
borders for storage and processing. using behavioral targeting to help it display
 Safe harbor: a private, self-regulating more relevant ads based on users’ search
policy and enforcement mechanism that activities and to target individuals as they
meets the objectives of government move from one site to another to show them
regulators and legislation but does not display or banner ads. Google allows
involve government regulation or tracking software on its search pages, and
enforcement. using DoubleClick, it can track users across
 Europe’s highest court (2010) struck down the the Internet.
safe harbor agreement, in large part because  Google’s AdSense program enables
of revelations that U.S. intelligence agencies Google to help advertisers select keywords
had gained access to EU personal data. The and design ads for various market segments
concept of safe harbor was replaced by a based on search histories.
policy now called Privacy Shield.  Google also scans the contents of messages
Internet Challenges to Privacy users receive of its free web-based e-mail
a) Cookies service called Gmail. Ads that users see
 when they read their e-mail are related to the o A statutory grant that protects creators of
subjects of these messages. intellectual property from having their
Online Privacy Alliance work copied by others for any purpose
 Formed by the online advertising industry. during the life of the author plus an
 To encourage self-regulation to develop a additional 70 years after the author’s
set of privacy guidelines for its members. death.
 The group promotes the use of online seals o For corporate-owned works, copyright
such as that of TRUSTe, certifying websites protection lasts for 95 years after their
adhering to certain privacy principles. initial creation
Network Advertising Initiative (NAI) o The intent behind copyright laws has
 Formed by the members of the advertising been to encourage creativity and
network industry. authorship by ensuring that creative
 To develop its own privacy policies to help people receive the financial and other
consumers opt out of advertising network benefits of their work.
programs and provide consumers redress o Copyright protects against copying entire
from abuses. programs or their parts.
o The drawback to copyright protection is
Privacy Policy = Data Use Policy
that the underlying ideas behind a work
 Firms such as Facebook and Google call a
are not protected, only their manifestation
privacy policy as in fact a data use policy.
in a work.
 The concept of privacy is associated with
c) Patents
consumer rights, which firms do not wish to
o Grants the owner an exclusive monopoly
recognize.
on the ideas behind an invention for 20
 A data use policy simply tells customers
years.
how the information will be used without any
o To ensure that inventors of new
mention of rights.
machines, devices, or methods receive
Technical Solutions the full financial and other rewards of their
 Many browsers have Do Not Track labor and yet make widespread use of the
options. For users who have selected the invention possible by providing detailed
Do Not Track browser option, their browser diagrams for those wishing to use the
will send a request to websites requesting idea under license from the patent’s
the user’s behavior not be tracked, but owner.
websites are not obligated to honor their o The strength of patent protection is that it
visitors’ requests not to be tracked. grants a monopoly on the underlying
 There is no online advertising industry concepts and ideas of software.
agreement on how to respond to Do Not
Track requests nor, currently, any legislation Challenges to Intellectual Property Rights
requiring websites to stop tracking.  Digital media differ from books, periodicals,
 Private browser encryption software or and other media in terms of ease of
apps on mobile devices provide consumers replication; ease of transmission; ease of
a powerful opportunity to at least keep their alteration; compactness—making theft easy;
messages private. and difficulties in establishing uniqueness.
 The proliferation of digital networks, including
B. Property Rights: Intellectual Property the Internet, has made it even more difficult to
protect intellectual property.
Intellectual property is considered to be tangible  Information can be illicitly copied from one
and intangible products of the mind created by place and distributed through other systems
individuals or corporations. and networks even though these parties do
Intellectual property is subject to a variety of not willingly participate in the infringement.
protections under three legal traditions:  Individuals have been illegally copying and
distributing digitized music files on the
a) Trade Secrets Internet. Illegal file sharing became so
o Any intellectual work product—a formula, widespread that it threatened the viability of
device, pattern, method of manufacture, the music recording industry.
or compilation of data—used for a
business purpose, provided it is not based Digital Millennium Copyright Act (DMCA) of 1998
on information in the public domain.  Implemented a World Intellectual Property
o Can be included: Software that contains Organization Treaty that makes it illegal to
novel or unique elements, procedures, or circumvent technology-based protections of
compilations. copyrighted materials.
o Trade Secret Law Software and Information Industry Association
(SIIA)
 Grants a monopoly on the ideas
 It lobbies for new laws and enforcement of
behind a work product, but it can be a
existing laws to protect intellectual property
very tenuous monopoly.
around the world.
 Protects the actual ideas in a work
 It runs an antipiracy hotline for individuals to
product, not only their manifestation.
report piracy activities, offers educational
 To make this claim, the creator or
programs to help organizations combat
owner must take care to bind
software piracy, and has published guidelines
employees and customers with
for employee use of software.
nondisclosure agreements and
prevent the secret from falling into the
4-4 How have information systems affected
public domain.
laws for establishing accountability and liability
b) Copyright
and the quality of everyday life?
Computer-Related Liability Problems  Computer crime: The commission of illegal
 In general, it is very difficult (if not impossible) acts by using a computer or against a
to hold software producers liable for their computer system.
software products, regardless of the physical  Federal crime: Simply accessing a
or economic harm that results. computer system without authorization or
 The kind of harm software failures causes is with intent to do harm, even by accident.
rarely fatal and typically inconveniences users  The most frequent types of incidents
but does not physically harm them (the comprise a greatest hits list of cybercrimes:
exception being medical devices). malware, phishing, network interruption,
 Software users may develop expectations of spyware, and denial of service attacks.
infallibility about software; software is less  Computer abuse: The commission of acts
easily inspected than a book, and it is more involving a computer that may not be illegal
difficult to compare with other software but are considered unethical.
products for quality; software claims to  The popularity of the Internet and e-mail has
perform a task rather than describe a task, as turned one form of computer abuse—
a book does; and people come to depend on spamming—into a serious problem for both
services essentially based on software. individuals and businesses.
 Originally, spam was junk e-mail an
System Quality: Data Quality and System Errors
organization or individual sent to a mass
Three Principal Sources of Poor System audience of Internet users who had
Performance expressed no interest in the product or
1. Software bugs and errors service being marketed.
2. Hardware or facility failures caused by  However, as cell phone use has
natural or other causes mushroomed, spam was certain to follow.
3. Poor input data quality Cell phone spam usually comes in the form
of SMS text messages, but increasingly,
Quality of Life: Equity, Access, and Boundaries users are receiving spam in their Facebook
Balancing Power: Center Versus Periphery Newsfeed and messaging service as well.
 The shift toward highly decentralized client–  Spammers tend to market pornography,
server computing, coupled with an ideology fraudulent deals and services, outright
of empowerment of social media, and the scams, and other products not widely
decentralization of decision making to lower approved in most civilized societies.
organizational levels, up until recently U.S. CAN-SPAM Act of 2003 (effectivity: 2004)
reduced the fears of power centralization in  It does not outlaw spamming but does ban
government institutions. deceptive e-mail practices by requiring
 Power has become more centralized in the commercial e-mail messages to display
hands of a few private oligopolies and large accurate subject lines, identify the true
government agencies. senders, and offer recipients an easy way to
Rapidity of Change: Reduced Response Time to remove their names from e-mail lists.
Competition  It also prohibits the use of fake return
 Information systems have helped to create addresses.
much more efficient national and Employment: Trickle-Down Technology and
international markets. Reengineering Job Loss
 Time-based competition has an ugly side;  Reengineering work is typically hailed in the
the business you work for may not have information systems community as a major
enough time to respond to global competitors benefit of new information technology.
and may be wiped out in a year along with  It is much less frequently noted that
your job. redesigning business processes has caused
Maintaining Boundaries: Family, Work, and millions of mid-level factory managers and
Leisure clerical workers to lose their jobs, along with
 The traditional boundaries that separate millions of blue-collar factory jobs.
work from family and just plain leisure have Equity and Access: Increasing Racial and
been weakened. Social Class Cleavages
 The explosive growth and use of  Although the gap in computer access is
smartphones have only heightened the narrowing, higher-income families in each
sense of many employees that they are ethnic group are still more likely to have
never away from work. home computers and broadband Internet
Dependence and Vulnerability access than lower-income families in the
 Today, our businesses, governments, same group.
schools, and private associations, such as  Moreover, the children of higher-income
churches, are incredibly dependent on families are far more likely to use their
information systems and are, therefore, Internet access to pursue educational goals,
highly vulnerable if these systems fail. whereas lower-income children are much
more likely to spend time on entertainment
Computer Crime and Abuse and games.
 New technologies, including computers,  This is called the “time-wasting” gap. Left
create new opportunities for committing uncorrected, this digital divide could lead
crime by creating new, valuable items to to a society of information haves, computer
steal, new ways to steal them, and new literate and skilled, versus a large group of
ways to harm others. information have-nots, computer illiterate
and unskilled.
Health Risks: RSI, CVS, and Cognitive Decline
Repetitive Stress Injury (RSI)
o A common and leading occupational disease
today.
o It occurs when muscle groups are forced
through repetitive actions often with high-
impact loads (such as tennis) or tens of
thousands of repetitions under low-impact
loads (such as working at a computer
keyboard).
The single largest source of RSI is computer
keyboards work.
Carpal Tunnel Syndrome (CTS)
o The most common kind of computer-relate.
o It is the pressure on the median nerve
through the wrist’s bony structure, called a
carpal tunnel, produces pain. The pressure
is caused by constant repetition of
keystrokes: in a single shift, a word
processor may perform 23,000 keystrokes.
RSI is avoidable. Designing workstations for a
neutral wrist position (using a wrist rest to support
the wrist), proper monitor stands, and footrests all
contribute to proper posture and reduced RSI.
Ergonomically correct keyboards are also an
option.

Computer Vision Syndrome (CVS) CHAPTER 5: IT INFRASTRUCTURE AND

o Any eyestrain condition related to display EMERGING TECHNOLOGIES
screen use in desktop computers, laptops,
e-readers, smartphones, and handheld 5-1 What is IT Infrastructure, and what are the
video games. stages and drivers of IT Infrastructure
evolution?
Computer technology may be harming our cognitive
functions or at least changing how we think and Defining IT Infrastructure
solve problems.
 Some experts believe that it is also Information Technology (IT) Infrastructure
preventing people from focusing and o It is the shared technology resources that
thinking clearly. provide the platform for the firm’s specific
 They argue that exposure to computers information system applications.
reduces intelligence and actually makes o It includes investment in hardware, software,
people dumb. and services—such as consulting, education,
 One MIT scholar believes exposure to and training—that are shared across the
computers discourages drawing and entire firm or across entire business units in
encourages looking up answers rather than the firm.
engaging in real problem solving. o It provides the foundation for serving
 The Interactive Session on Organizations customers, working with vendors, and
describes a related concern: that managing internal firm business process.
automation is de-skilling people by o It consists of a set of physical devices and
removing opportunities to learn important software applications that are required to
tasks and impairing their ability to think on operate the entire enterprise.
their own.
It also includes a set of firmwide services budgeted
by management and composed of both human and
technical capabilities. These services include the
following:
1. Computing Platforms
o It used to provide computing services
that connect employees, customers, and
suppliers into a coherent digital
environment, including large
mainframes, midrange computers,
desktop and laptop computers, and
mobile handheld and remote cloud
computing services.
2. Telecommunications Services
o It provides data, voice, and video
connectivity to employees, customers,
and suppliers.
3. Data Management Services
 o It stores and manages corporate data
and provide capabilities for analyzing
the data.
4. Application Software Services (incl: online
software services)
o It provides enterprise-wide capabilities
such as enterprise resource planning,
customer relationship management,
supply chain management, and
knowledge management systems that
are shared by all business units.
5. Physical Facilities Management Services
o It develops and manage the physical
installations required for computing,
telecommunications, and data
management services.
6. IT Management Services
o It plans and develop the infrastructure,
coordinate with the business units for IT
services, manage accounting for the IT
expenditure, and provide project
management services.
7. IT Standards Services
o It provides the firm and its business
units with policies that determine which
information technology will be used,
when, and how.
8. IT Education Services
o It provides training in system use to
employees and offer managers training
in how to plan for and manage IT
investments.

9. IT Research and Development Services 1. General-Purpose Mainframe and

o It provides the firm with research on Minicomputer Era (1959 to Present)
potential future IT projects and Mainframe Computer
investments that could help the firm o The introduction of the IBM 1401 and 7090
differentiate itself in the marketplace.
transistorized machines in 1959 marked the
This “service platform” perspective makes it easier beginning of widespread commercial use of
to understand the business value provided by mainframe computers.
infrastructure investments. The services a firm is o In 1965, the mainframe computer truly came
capable of providing to its customers, suppliers, into its own with the introduction of the IBM
and employees are a direct function of its IT 360 series.
infrastructure. o The IBM 360 was the first commercial
computer that could provide time sharing,
multitasking, and virtual memory in more
advanced models.
o IBM has dominated mainframe computing
from this point on.
o Mainframe computers became powerful
enough to support thousands of online remote
terminals connected to the centralized
mainframe using proprietary communication
protocols and proprietary data lines.
o The mainframe era was a period of highly
centralized computing under the control of
professional programmers and systems
operators (usually in a corporate data center),
with most elements of infrastructure provided
by a single vendor, the manufacturer of the
hardware and the software.
Evolution of IT Infrastructure
Minicomputers
The IT infrastructure in organizations today is an o It was introduced by Digital Equipment
outgrowth of more than 50 years of evolution in
Corporation (DEC) in 1965.
computing platforms. There have been five stages
o DEC minicomputers (PDP-11 and later the
in this evolution, each representing a different
VAX machines) offered powerful machines at
configuration of computing power and infrastructure
far lower prices than IBM mainframes,
elements.
making possible decentralized computing,
customized to the specific needs of individual
departments or business units rather than
time sharing on a single huge mainframe.
 o In recent years, the minicomputer has o At the first level, a web server will serve a
evolved into a midrange computer or webpage to a client in response to a
midrange server and is part of a network. request for service.
o Web server software is responsible for
2. Personal Computer Era (1981 to Present)
o The appearance of the IBM PC in 1981 is locating and managing stored webpages.
B. Application Server
usually considered the beginning of the PC
o If the client requests access to a corporate
era because this machine was the first to be
widely adopted by American businesses. system (a product list or price information,
o At first using the DOS operating system, a for instance), the request is passed along
to an application server.
text-based command language, and later
o Application server software handles all
the Microsoft Windows operating
system, the Wintel PC computer application operations between a user and
(Windows operating system software on a an organization’s back-end business
computer with an Intel microprocessor) systems.
became the standard desktop personal o The application server may reside on the
computer. same computer as the web server or on its
own dedicated computer.
3. Client/Server Era (1983 to Present)
o In client/server computing, desktop or laptop Novell NetWare was the leading technology for
computers called clients are networked to client/server networking at the beginning of the
powerful server computers that provide the client/server era. Today, Microsoft is the market
client computers with a variety of services leader with its Windows operating systems
and capabilities. (Windows Server, Windows 10, Windows 8, and
Windows 7).
Computer processing work is split between these
two types of machines. 4. Enterprise Computing Era (1992 to Present)
o In the early 1990s, firms turned to
A. Client networking standards and software tools
o The client is the user point of entry, that could integrate disparate networks and
whereas the server typically processes and applications throughout the firm into an
stores shared data, serves up web pages, enterprise-wide infrastructure.
or manages network activities. o As the Internet developed into a trusted
B. Server communications environment after 1995,
o The term server refers to both the software business firms began seriously using the
application and the physical computer on Transmission Control Protocol/Internet
which the network software runs. Protocol (TCP/IP) networking standard to
o The server could be a mainframe, but tie their disparate networks together.
today, server computers typically are more
powerful versions of personal computers,
Enterprise Infrastructure/ Enterprise-wide
based on inexpensive chips and often
Network
using multiple processors in a single
 The resulting IT infrastructure links different
computer box or in server racks.
pieces of computer hardware and smaller
Types of Client/Server Network networks into an enterprise-wide network so
1. Two-tiered Client/Server Architecture that information can flow freely across the
o The simplest client/server network organization and between the firm and other
organizations.
consists of a client computer networked to
 It can link different types of computer
a server computer, with processing split
hardware, including mainframes, servers,
between the two types of machines.
PCs, and mobile devices, and it includes
o Used by small businesses.
public infrastructures such as the telephone
2. Multitiered (or called N-tier) Client/Server
system, the Internet, and public network
Architecture
services.
o The work of the entire network is balanced
 The enterprise infrastructure also requires
over several different levels of servers, software to link disparate applications and
depending on the kind of service being enable data to flow freely among different
requested. parts of the business, such as enterprise
o Used by corporations. applications and web services.
5. Cloud and Mobile Computing Era (2000 to
Present)
o Cloud computing refers to a model of
computing that provides access to a shared
pool of computing resources (computers,
storage, applications, and services) over the
network, often the Internet.
o These “clouds” of computing resources can
be accessed on an as-needed basis from
In a multitiered client/server network, client any connected device and location.
requests for service are handled by different o Cloud computing is now the fastest growing
levels of servers. form of computing.
A. Web Server
Five Technology Drivers of Infrastructure
Evolution
1. Moore’s Law and Microprocessing Power o As communication costs fall toward a very
Moore’s Law small number and approach zero,
o In 1965, Gordon Moore, the director of utilization of communication and
computing facilities explode.
Fairchild Semiconductor’s Research and
o To take advantage of the business value
Development Laboratories, wrote in
Electronics magazine that since the first associated with the Internet, firms must
microprocessor chip was introduced in greatly expand their Internet connections,
1959, the number of components on a chip including wireless connectivity, and greatly
with the smallest manufacturing costs per expand the power of their client/server
component (generally transistors) had networks, desktop clients, and mobile
doubled each year. This assertion became the computing devices.
foundation of Moore’s Law. 5. Standards and Network Effects
o There are at least three variations of o Technology standards are specifications
Moore’s Law, none of which Moore ever that establish the compatibility of products
stated: and the ability to communicate in a
(1) the power of microprocessors doubles network.
every 18 months. o Technology standards unleash powerful
(2) (2) computing power doubles every 18 economies of scale and result in price
months. declines as manufacturers focus on the
(3) (3) the price of computing falls by half products built to a single standard.
every 18 months. Without these economies of scale,
Microprocessing Power computing of any sort would be far more
o Exponential growth in the number of expensive than is currently the case.
transistors and the power of processors
coupled with an exponential decline in
computing costs may not be able to continue
much longer. Chip manufacturers continue to
miniaturize components, by shrinking the size
of transistors down to the width of several
atoms by using nanotechnology.
o Nanotechnology uses individual atoms and
molecules to create computer chips and other
devices that are thousands of times smaller
than current technologies permit.
o Chip manufacturers are trying to develop a
manufacturing process to produce nanotube
processors economically. Stanford University
scientists have built a nanotube computer.
o Nanotubes are tiny tubes about 10,000 times
thinner than a human hair. They consist of
rolled-up sheets of carbon hexagons and
have potential use as minuscule wires or in
ultrasmall electronic devices and are very 5-2 What are the [seven] components of IT
powerful conductors of electrical current. Infrastructure?
2. The Law of Mass Digital Storage
o The amount of digital information is
roughly doubling every year. Fortunately,
the cost of storing digital information is
falling at an exponential rate of 100
percent a year.
3. Metcalfe’s Law and Network Economics
o Robert Metcalfe—inventor of Ethernet
local area network technology— claimed
in 1970 that the value or power of a
network grows exponentially as a function
of the number of network members.
o Metcalfe and others point to the increasing
returns to scale that network members
receive as more and more people join the
network. As the number of members in a
network grows linearly, the value of the
entire system grows exponentially and There are seven major components that must be
continues to grow as members increase. coordinated to provide the firm with a coherent IT
o Demand for information technology has infrastructure.
been driven by the social and business
value of digital networks, which rapidly 1. Computer Hardware Platforms
multiply the number of actual and potential o The computers with Intel
links among network members. microprocessors in the first computer
hardware platform use complex instruction
4. Declining Communications Costs and the set computing (CISC) with several
Internet thousand instructions built into the chip.
 This requires a considerable number of o MySQL is a Linux open-source relational
transistors per processor, consumes database product now owned by Oracle
power, and generates heat. Corporation.
o Mobile devices in the second computer o Apache Hadoop is an open-source
hardware platform are not required to software framework for managing very
perform as many tasks as computers in the large data sets.
first computer hardware platform. They are o The physical data storage market for large-
able to use reduced instruction set scale systems is dominated by EMC
computing (RISC), which contains a Corporation.
smaller set of instructions, consumes less
power, and generates less heat. 5. Networking/Telecommunications Platforms

2. Operating Systems Platforms Networking Platforms

o Microsoft Windows Server is capable of o Windows Server is predominantly used as a
providing enterprise-wide operating system local area network operating system, followed
and network services and appeals to by Linux and Unix.
organizations seeking Windows-based IT o Large, enterprise-wide area networks use
infrastructures. some variant of Unix.
o Unix and Linux are scalable, reliable, and o Most local area networks, as well as wide
much less expensive than mainframe area enterprise networks, use the TCP/IP
operating systems. They can also run on protocol suite as a standard.
many different types of processors. The o Cisco and Juniper Networks are leading
major providers of Unix operating systems networking hardware providers.
are IBM, HP, and Oracle-Sun, each with Telecommunications Platforms
slightly different and partially incompatible o Telecommunications platforms are typically
versions. provided by telecommunications/telephone
o At the client level, 81 percent of PCs use services companies that offer voice and data
some form of the Microsoft Windows connectivity, wide area networking, wireless
operating system (such as Windows 10, services, and Internet access.
Windows 8, or Windows 7) to manage the o Leading telecommunications service vendors
resources and activities of the computer. include AT&T and Verizon. This market is
However, there is now a much greater exploding with new providers of cellular
variety of client operating systems than in wireless, high-speed Internet, and Internet
the past, with new operating systems for telephone services.
computing on handheld mobile digital
devices or cloud-connected computers. 6. Internet Platforms
o Google’s Chrome OS provides a o Internet platforms include hardware,
lightweight operating system for cloud software, and management services to
computing using a web-connected support a firm’s website, including web
computer. Programs are not stored on the hosting services, routers, and cabling or
user’s computer but are used over the wireless equipment.
Internet and accessed through the Chrome o A web hosting service maintains a large
web browser. User data reside on servers web server, or series of servers, and
across the Internet. provides fee-paying subscribers with
o Android is an open-source operating space to maintain their websites.
system for mobile devices. o The major web software application
o iOS, the operating system for the development tools and suites are supplied
phenomenally popular Apple iPad, iPhone, by:
and iPod Touch, features a multitouch  Microsoft
interface, where users employ one or  Microsoft Visual Studio and the
more fingers to manipulate objects on a Microsoft .NET family of
screen without a mouse or keyboard. development tools
 Oracle-Sun
3. Enterprise Software Applications  Sun’s Java is the most widely
o The largest providers of enterprise used tool for developing
application software are SAP and Oracle. interactive web applications on
o Also included in this category is both the server and client sides.
middleware software supplied by vendors
such as IBM and Oracle for achieving 7. Consulting and System Integration Services
firmwide integration by linking the firm’s o Leading consulting firms providing this
existing application systems. expertise include Accenture, IBM Global
o Microsoft is attempting to move into the Business Services, HP, Infosys, and Wipro
lower ends of this market by focusing on Technologies.
small and medium-sized businesses. o Software integration means ensuring the
new infrastructure works with the firm’s
4. Data Management and Storage older, so-called legacy systems and
o Enterprise database management ensuring the new elements of the
software is responsible for organizing and infrastructure work with one another.
managing the firm’s data so that they can o Legacy systems are generally older
be efficiently accessed and used. transaction processing systems created
o The leading database software providers for mainframe computers that continue to
are IBM (DB2), Oracle, Microsoft (SQL be used to avoid the high cost of replacing
Server), and Sybase (Adaptive Server or redesigning them.
Enterprise).
5-3 What are the [six] current trends in 4. Virtualization
computer hardware platforms? o Virtualization is the process of presenting
1. The Mobile Digital Platform a set of computing resources (such as
o New mobile digital computing platforms computing power or data storage) so that
they can all be accessed in ways that are
have emerged as alternatives to PCs and
not restricted by physical configuration or
larger computers.
geographic location.
o The iPhone and Android smartphones
o Virtualization enables a single physical
have taken on many functions of PCs,
resource (such as a server or a storage
including transmitting data, surfing the
device) to appear to the user as multiple
web, transmitting e-mail and instant
logical resources.
messages, displaying digital content, and
o VMware is the leading virtualization
exchanging data with internal corporate
systems. software vendor for Windows and Linux
o The new mobile platform also includes servers.
o Server virtualization is a common
small, lightweight netbooks optimized for
wireless communication and Internet method of reducing technology costs by
access, table computers, and digital e- providing the ability to host multiple
book readers. systems on a single physical machine.
o Smartphones and tablet computers are o Virtualization also facilitates centralization
increasingly used for business computing and consolidation of hardware
and consumer applications. administration.
o Wearable computing devices are a o Virtualization also enables multiple
recent addition to the mobile digital physical resources (such as storage
platform. These include smartwatches, devices or servers) to appear as a single
smart glasses, smart ID badges, and logical resource, as in software-defined
activity trackers. storage (SDS), which separates the
software for managing data storage from
2. Consumerization of IT and BYOD storage hardware.
Bring Your Own Device (BYOD) 5. Cloud Computing
o A phenomenon in which the popularity, ease o Companies and individuals can perform all
of use, and rich array of useful applications for of their computing work using a virtualized
smartphones and tablet computers have IT infrastructure in a remote location.
created a groundswell of interest in allowing o Cloud computing is a model of computing
employees to use their personal mobile in which computer processing, storage,
devices in the workplace. software, and other services are provided
o One aspect of the consumerization of IT, in as a shared pool of virtualized resources
which new information technology that first over a network, primarily the Internet.
emerges in the consumer market spreads into o These “clouds” of computing resources
business organizations. can be accessed on an as-needed basis
Consumerization of IT from any connected device and location.
o It includes not only mobile personal devices
but also business uses of software services
that originated in the consumer marketplace.
o It is forcing businesses to rethink the way they Five Essential Characteristics of Cloud
obtain and manage information technology Computing
equipment and services. a. On-demand self-service: Consumers can
3. Quantum Computing obtain computing capabilities such as server
o Quantum computing is an emerging time or network storage as needed
automatically on their own.
technology with the potential to
b. Ubiquitous network access: Cloud
dramatically boost computer processing
resources can be accessed using standard
power to find answers to problems that
network and Internet devices, including
would take conventional computers many
mobile platforms.
years to solve.
c. Location-independent resource pooling:
o Quantum computing uses the principles of
Computing resources are pooled to serve
quantum physics to represent data and
multiple users, with different virtual resources
perform operations on these data. While
dynamically assigned according to user
conventional computers handle bits of
demand. The user generally does not know
data either as 0 or 1 but not both,
where the computing resources are located.
quantum computing can process bits as 0,
d. Rapid elasticity: Computing resources can
1, or both simultaneously.
be rapidly provisioned, increased, or
o A quantum computer would gain
decreased to meet changing user demand.
enormous processing power through this e. Measured service: Charges for cloud
ability to be in multiple states at once, resources are based on amount of resources
allowing it to solve some scientific and actually used.
business problems millions of times faster
than can be done today. Three Types of Cloud Computing Services
o IBM has made quantum computing a. Infrastructure as a service (IaaS) (ex:
available to the general public through Amazon Web Services)
IBM Cloud.  Customers use processing, storage,
o Google’s Alphabet and Lockheed networking, and other computing
Martin currently use quantum platforms.
 resources from cloud service providers product descriptions, one-time large
to run their information systems. computing projects, developing and
 These include its Simple Storage testing new applications, and consumer
Service (S3) for storing customers’ data services such as online storage of data,
and its Elastic Compute Cloud (EC2) music, and photos.
service for running their applications. o Third-party service offering computing,
 Users pay only for the amount of storage, and software services to
computing and storage capacity they multiple customers and that is available
actually use. to the public.
b. Software as a service (SaaS) b. Private Cloud (managed by In-house IT or
 Customers use software hosted by the Private third-party host)
vendor on the vendor’s cloud o It is operated solely for an organization.
infrastructure and delivered as a It may be managed by the organization
service over a network. or a third party and may be hosted
 Leading software as service (SaaS) either internally or externally.
examples are Google Apps, which o Like public clouds, private clouds are
provides common business able to allocate storage, computing
applications online, and Salesforce. power, or other resources seamlessly
com, which leases customer to provide computing resources on an
relationship management and related as-needed basis.
software services over the Internet. o Cloud infrastructure operated solely for
 Users access these applications from a a single organization and hosted either
web browser, and the data and internally or externally.
software are maintained on the c. Hybrid cloud computing model (managed
providers’ remote servers. by In-house IT, Private host, Third-party
c. Platform as a service (PaaS) providers)
 Customers use infrastructure and o It is used when organizations use their
programming tools supported by the own infrastructure for their most
cloud service provider to develop their essential core activities and adopt
own applications. public cloud computing for less-critical
 For example, IBM offers a Bluemix systems or for additional processing
service for software development and capacity during peak business period.
testing on the IBM cloud. o Combination of private and public
 Another example is Salesforce.com’s
cloud services that remain separate
Force.com, which allows developers to
entities.
build applications that are hosted on its
servers as a service. It is a leading  On-demand computing has also been used to
software service for business that describe such services when organizations
provides customer relationship using public clouds do not own the
management (CRM) and other infrastructure and they do not have to make
application software solutions as large investments in their own hardware and
software services leased over the software. they purchase their computing
Internet. services from remote providers and pay only for
the amount of computing power they actually
use (utility computing) or are billed on a monthly
or annual subscription basis.

6. High-Performance and Power-Saving

Processors
o A multicore processor is an integrated
circuit to which two or more processor
cores have been attached for enhanced
performance, reduced power
consumption, and more efficient
simultaneous processing of multiple
tasks.
o This technology enables two or more
processing engines with reduced power
requirements and heat dissipation to
perform tasks faster than a resource-
hungry chip with a single processing
core.

5-4 What are the [four] current computer

software platforms and trends?
Three Type of Cloud Computing Models
a. Public Cloud (managed by Third-party 1. Linux and Open Source Software
service providers) Open Source Software
o It is owned and maintained by a cloud o Open-source software is software produced
service provider and made available to by a community of several hundred thousand
the general public or industry group. programmers around the world.
o Public cloud services are often used for o OpenSource.org , open source software is
websites with public information and free and can be modified by users. Works
 derived from the original code must also be multimedia elements—images, audio, and
free, and the software can be redistributed by video. Third-party plug-in applications like
the user without additional licensing. Flash, Silverlight, and Java have been
o Open source software is by definition not required to integrate these rich media with
restricted to any specific operating system or webpages. However, these add-ons require
hardware technology, although most open additional programming and put strains on
source software is currently based on a Linux computer processing.
or Unix operating system. o The next evolution of HTML, called HTML5,
solves this problem by making it possible to
Linux
embed images, audio, video, and other
o Perhaps the most well-known open source
elements directly into a document without
software is Linux, an operating system related
processor-intensive add-ons. HTML5 makes it
to Unix.
easier for webpages to function across
o Linux was created by the Finnish programmer
different display devices.
Linus Torvalds and first posted on the Internet
in August 1991. 3. Web Services and Service-Oriented
o Linux applications are embedded in cell Architecture
phones, smartphones, tablet computers and Web Services
consumer electronics. o A set of loosely coupled software components
o Linux is available in free versions that exchange information with each other
downloadable from the Internet or in low-cost using universal web communication standards
commercial versions that include tools and and languages.
support from vendors such as Red Hat. o They can exchange information between two
o Although Linux is not used in many desktop different systems regardless of the operating
systems, it is a leading operating system for systems or programming languages on which
servers, mainframe computers, and the systems are based.
supercomputers. o They can be used to build open standard
2. Software for the Web: Java, HTML, and web-based applications linking systems of two
HTML5 different organizations, and they can also be
used to create applications that link disparate
Java systems within a single company.
o It is an is operating system-independent,
processor-independent, object-oriented Extensible Markup Language (XML)
programming language created by Sun o The foundation technology for web services.
Microsystems that has become the leading o This language was developed in 1996 by the
interactive programming environment for the World Wide Web Consortium (W3C, the
web. international body that oversees the
o Java platform has migrated into mobile development of the web) as a more powerful
phones, smartphones, automobiles, music and flexible markup language than hypertext
players, game machines, and set-top cable markup language (HTML) for webpages.
television systems serving interactive content o Whereas HTML is limited to describing how
and pay-per-view services. data should be presented in the form of
o Java software is designed to run on any webpages, XML can perform presentation,
computer or computing device, regardless of communication, and storage of data.
the specific microprocessor or operating Web services communicate through XML
system the device uses. messages over standard web protocols.
o Java Virtual Machine interprets Java
programming code for that machine. In this
manner, the code is written once and can be
used on any machine for which there exists a
Java Virtual Machine. Service-oriented Architecture
o At the enterprise level, Java is being used for o The collection of web services that are used
more complex e-commerce and e-business to build a firm’s software systems.
applications that require communication with o A set of self-contained services that
an organization’s back-end transaction communicate with each other to create a
processing systems. working software application.
Web Browser 4. Software Outsourcing and Cloud Services
o Java developers can create small applet Three External Sources for Software
programs that can be embedded in webpages
a. Software Packages and Enterprise
and downloaded to run on a web browser.
Software
o It is an easy-to-use software tool with a
o A software package is a prewritten
graphical user interface for displaying
commercially available set of software
webpages and for accessing the web and
programs that eliminates the need for a
other Internet resources.
firm to write its own software programs
HTML and HTML5 for certain functions, such as payroll
o Hypertext Markup Language (HTML) is a processing or order handling.
page description language for specifying how o Enterprise application software
text, graphics, video, and sound are placed on vendors (SAP and Oracle-PeopleSoft)
a webpage and for creating dynamic links to have developed powerful software
other webpages and objects. packages that can support the primary
o Today, however, the web is much more social business processes of a firm worldwide
and interactive, and many webpages have from warehousing, customer relationship
 management, and supply chain o It is these apps that turn smartphones and
management to finance and human tablets into general-purpose computing tools.
resources. o Because so many people are now accessing
b. Software Outsourcing the Internet from their mobile devices, some
o Software outsourcing enables a firm to say that apps are “the new browsers.”
contract custom software development o Apps are also starting to influence the design
or maintenance of existing legacy and function of traditional websites as
programs to outside firms, which often consumers are attracted to the look and feel
operate offshore in low-wage areas of of apps and their speed of operation.
the world.
o Offshore software outsourcing firms 5-5 What are the [three] challenges of managing
have primarily provided lower-level IT infrastructure and management solutions?
maintenance, data entry, and call center
1. Dealing with Platform and Infrastructure
operations, although more sophisticated
Change
and experienced offshore firms have
o As firms grow, they often quickly outgrow
been hired for new-program
development. their infrastructure. As firms shrink, they
c. Cloud-based Software Services and Tools can get stuck with excessive infrastructure
o Cloud-based software and the data it purchased in better times.
o Scalability refers to the ability of a
uses are hosted on powerful servers in
data centers and can be accessed with computer, product, or system to expand to
an Internet connection and standard serve a large number of users without
web browser. breaking down. New applications, mergers
o Instead of buying and installing software and acquisitions, and changes in business
volume all affect computer workload and
programs, subscribing companies rent
must be considered when planning
the same functions from these services,
hardware capacity.
with users paying either on a
o Firms using mobile computing and cloud
subscription or per-transaction basis.
o In order to manage their relationship computing platforms will require new
policies and procedures for managing
with an outsourcer or technology service
these platforms.
provider, firms need a contract that
includes a service level agreement 2. Management and Governance
(SLA). o A long-standing issue among information
 The SLA is a formal contract system managers and CEOs has been the
between customers and their service question of who will control and manage
providers that defines the specific the firm’s IT infrastructure.
responsibilities of the service
3. Making Wise Infrastructure Investments
provider and the level of service
o IT infrastructure is a major investment for
expected by the customer.
 It typically specify the nature and the firm.
level of services provided, criteria for o If too much is spent on infrastructure, it
performance measurement, support lies idle and constitutes a drag on the
options, provisions for security and firm’s financial performance.
disaster recovery, hardware and o If too little is spent, important business
software ownership and upgrades, services cannot be delivered, and the
customer support, billing, and firm’s competitors (who spent the right
conditions for terminating the amount) will outperform the under-
agreement. investing firm.
o The decision either to purchase your own
IT assets or rent them from external
providers is typically called the rent-
Mashups and Apps versus-buy decision.
Mashups Total Cost of Ownership of Technology Assets
o Individual users and entire companies mix
and match these software components to Total Cost of Ownership (TCO) Model
create their own customized applications and o It can be used to analyze these direct and
to share information with others. The resulting indirect costs to help firms determine the
software applications are called mashups. actual cost of specific technology
o The idea is to take different sources and implementations.
produce a new work that is greater than the
sum of its parts.
o Web mashups combine the capabilities of
two or more online applications to create a
kind of hybrid that provides more customer
value than the original sources alone.
Apps
o A small, specialized software programs
(application software) that are designed for
mobile devices like smartphones and tablets.
They are downloaded from app stores like
Apple’s App Store and Google Play.
o Google refers to its online services as apps.
Competitive Forces Model for IT Infrastructure
Investment

a. Market demand for your firm’s services.

o Make an inventory of the services you
currently provide to customers, suppliers,
and employees. Survey each group or
hold focus groups to find out if the
services you currently offer are meeting
the needs of each group.
b. Your firm’s business strategy.
o Analyze your firm’s five-year business
strategy and try to assess what new
services and capabilities will be required
to achieve strategic goals.
c. Your firm’s IT strategy, infrastructure and
cost.
o Examine your firm’s information
technology plans for the next five years
and assess its alignment with the firm’s
business plans.
o Determine the total IT infrastructure
costs.
d. Information technology assessment.
o Is your firm behind the technology curve
or at the bleeding edge of information
technology? Both situations are to be
avoided.
o It is usually not desirable to spend
resources on advanced technologies that
are still experimental, often expensive,
and sometimes unreliable. You want to
spend on technologies for which
standards have been established and
IT vendors are competing on cost, not
design, and where there are multiple
suppliers.
e. Competitor firm services.
o Try to assess what technology services
competitors offer to customers, suppliers,
and employees.
o Establish quantitative and qualitative
measures to compare them to those of
your firm.
f. Competitor firm IT infrastructure
investments.
o Benchmark your expenditures for IT
infrastructure against your competitors.