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The Two Sides of Information Technology in Today's Business World
Business Essentials · Chapter 18: Technology and Ethics in BusinessSection 18.1 · lesson 81 of 10514 min · free with a free account
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In this lesson
Every technology decision is an opportunity and a commitment.
- Describe the benefits IT brings a business
- Describe its costs, risks, and unintended effects
- Evaluate a system's full life-cycle cost
- Assess a technology decision for both sides
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Everything said in the video, section by section (1,966 words). Read along, or search it.
Technology and Ethics in Business
The Two Sides of Information Technology
Every technology a business adopts has two sides. There's what it promises, and there's what it quietly commits the business to. We'll set six benefits of information technology against the cost or risk that travels with each. We'll look at cost over a system's whole life, and see which part most budgets leave out. We'll treat security and continuity as business risks, with questions management must be able to answer. Then the contested effects on work: automation, skills, and monitoring, with both sides at full strength. Then attention, access, and a five-question framework for deciding. And a clinic chain whose new system cost far more than the price its board approved.
Both Sides
Opportunity, and Commitment
A technology decision usually arrives dressed as an opportunity. A system that will save time, reach new customers, or reveal something the business didn't know. But it's always also a commitment. It's a claim on money, on attention, and on organizational change, and that claim persists long after the decision. This section looks at both sides of the same investment. Here's why that matters. Many proposals are written to encourage you to weigh only the opportunity. A business that does that will systematically underestimate what a technology choice actually costs it. Not occasionally. Systematically, because the one-sided framing is built into the proposal. So for every benefit we name, we'll name the cost that travels with it.
The Benefits
What Technology Offers a Business
Start with the benefits. There are six broad categories. Productivity and cost reduction come from automating repetitive work, cutting the labor and error in a process. Speed comes from tasks that once took days now taking minutes. That changes what a business can promise a customer. Reach comes from digital channels that let even a small business serve customers far beyond its physical location. Information for decisions comes from systems that put relevant data in front of the manager who must decide. Coordination across distance comes from tools that let people work together without being in the same place. And customization at scale comes from systems that tailor an offer to an individual customer. Without them, doing that by hand for each customer would carry its own cost. Beyond those six, technology can enable business models that simply couldn't exist before. Think of a marketplace connecting buyers and sellers who would otherwise never have found one another. That's a real list of gains. Now for what they cost.
Costs and Risks
What Comes With Every Benefit
Against those benefits stand six categories of cost and risk. First, acquisition and ongoing cost. It's not just the price of buying or subscribing. There's an ongoing cost that's routinely underestimated: support, upgrades, and the staff time needed to keep a system running well. Second, implementation risk. The project may run over budget, over time, or fail to deliver what was promised. Third, dependency. Rely on a system completely, and its failure stops the business, with severe and immediate consequences. Fourth, vendor lock-in and switching cost. Build enough around one vendor's system, and changing becomes expensive and disruptive, even when a better option appears. Fifth, obsolescence and the replacement cycle. Every system eventually needs replacing. That replacement cost belongs to the original decision, even though it arrives years later. And sixth, the skills requirement. A business needs people who can specify, run, and use the system competently. Without them, even a well-chosen system underperforms.
Table 18.1.1
Each Benefit, Its Cost, and the Question to Ask
This table pairs each benefit with the cost that typically comes with it, and the question to ask before committing. Productivity gains come with implementation risk, and with the skills needed to realize the saving. So ask what has to change in how people work, for that saving to actually appear. Speed brings dependency. A fast process that fails stops the business fast, too. Ask what happens in the hours it's down. Reach into new markets multiplies skills and support needs. Can the business actually serve the customers it reaches? Information for decisions carries the ongoing cost of data quality. Who keeps the underlying data accurate over time? Coordination tools bring lock-in, as habits and data become tied to one platform. How hard would it be to move later? Customization at scale needs costly data and analytics capability behind it. Does its value exceed what maintaining it costs? The question column is the useful part. It turns each pairing into something a manager can ask before signing a contract. A proposal that lists only the benefit column is an incomplete proposal. And the question column is what a manager should insist on having answered.
Life-Cycle Cost
Counting the Whole Life of a System
A technology decision should be judged over the life cycle of the system, not at the moment of purchase. That life has four cost components: acquisition, implementation, ongoing cost, and eventual replacement. Acquisition is the visible, one-time price of buying or subscribing. It's easy to focus on. The ongoing component is the one that hurts. It's frequently the largest over the system's life, and it's the one most often left out of an initial budget. Why? Attention goes to the visible price, and the years of support, upgrades, and staff time that follow get underestimated. Take an illustrative investment, with figures constructed for the exercise. Its ongoing component comes to one hundred forty thousand dollars, the largest of the four. Budget only for acquisition and implementation, and you've planned for less than half of what the system will actually cost. And replacement, years later, is still part of the original decision's cost.
Security and Continuity
Failure as a Business Risk
Security and continuity came up in chapter seventeen as governance obligations. Here, they're business risks. The consequences fall into four categories. Operational interruption is normal business activity halting or slowing while a system is unavailable. Data loss is losing records the business needs to operate, or to meet its obligations. Regulatory exposure is the legal consequence of failing obligations that govern the data a business holds. That includes notification duties that a number of state and federal laws impose when personal information is compromised. Those terms vary by jurisdiction, and should be confirmed with counsel. And reputational damage is lost trust among customers, partners, and the public, independent of any direct financial cost. Continuity planning is a management responsibility, not a technical one. Whatever the technical detail, a business should be able to answer four questions about its own dependencies. Which systems, if unavailable, would stop the business? And how long could it function without each one? What's the plan for serving customers while a system is restored? And who is responsible for making that plan work? A business that can't answer these hasn't planned for continuity, whatever technical safeguards it has.
Workforce Effects
Automation and Jobs: A Contested Question
Technology changes work, and several questions about that change are genuinely contested. We'll give the strongest form of each position, and no verdict. Start with automation and displacement. One position holds that automating routine tasks destroys the jobs built around them. The cost to displaced workers is real, and sometimes concentrated. That's especially true where new work needs different skills, or is far away. The competing position holds that automation has historically also created new tasks and roles, often ones that didn't exist before. The economy adapted to earlier waves, from mechanization in agriculture to computerization in offices, without a sustained rise in overall unemployment. Notice there are two different questions hiding here. The empirical one asks how the number and quality of jobs created compares with those lost, in a given period and industry. It also asks how long the transition takes for the specific workers affected. The normative one asks what a business, or a society, owes to workers whose tasks are automated, and how to meet that obligation.
Skills and Monitoring
Which Skills Gain Value, and How Closely to Track
Next, skills. Technology tends to reduce the value of some skills, and raise the value of others. Reasonable people differ on whether that, on balance, widens or narrows opportunity. It depends on who has access to the training that the newly valuable skills require. Then monitoring, and the intensification of work. One position holds that tracking work in greater detail can identify problems. It can improve fairness, by reducing reliance on a supervisor's subjective impression. And it can help a business meet its obligations to customers and regulators. The competing position holds that closer tracking increases pressure and stress. It narrows the discretion that makes work tolerable, and often better performed. And it can be used to intensify the pace of work beyond what's sustainable. Both positions are serious, and this course doesn't settle them. It treats monitoring only as a policy question, of notice, proportionality, and purpose, never as a technique.
Attention and Access
Boundaries Eroded, People Left Out
Chapter seventeen described the always-on problem created by digital communication tools. The same dynamic applies to workplace technology in general. Systems that are always available create an expectation, stated or merely felt, that the people using them should be too. So when a business introduces any new technology, it should ask what the system enables, and also what boundary it erodes. The digital divide is the gap in access to reliable technology and connectivity, across different populations and regions. It matters to a business in two directions. As a market consideration, an offering that depends on reliable internet or capable devices can't reach some potential customers at all. That narrows the market, however well the offering is designed. As a workforce consideration, a business may assume every employee or applicant has equal access to the technology needed. Those who don't may be inadvertently excluded, from working, from training, or even from applying. These gaps are a documented pattern across populations. They're not a claim about any individual's capability.
Deciding
5 Questions, and Staged Commitment
Put it together, and a technology decision can be assessed with five questions, taken together. What problem does it actually solve? What does it cost over its life, using the life-cycle view, not the acquisition price alone? What does it commit the business to, in vendor relationships, data structures, and staff skills? What does it make harder? Every commitment forecloses some other option. And what happens when it fails, given the dependency and continuity risks we've covered? A proposal that answers only the first question isn't yet a decision a business is equipped to make. Small businesses face a sharper version of all this. The same budget overrun or disruption a large organization can weather may threaten a small one's survival. That's the case for staged commitment, an idea first met in chapter three. Adopt a new technology in a limited trial first, so discovering a poor fit costs only a fraction of full adoption. The trade is real. A single large commitment might offer a lower unit cost, and faster full deployment. Staging gives those up, in exchange for a smaller and more recoverable loss if the choice proves wrong.
Case Vignette
The Cost That Kept Arriving
Here's a composite case, built for instruction. Renata is the finance manager of a regional chain of physical therapy clinics, considering a new scheduling and billing system. The vendor's proposal quotes a license fee and a one-time implementation charge. The board approves the budget on that basis. Over the next two years, the costs keep arriving. Staff training beyond the initial session. A support contract that was optional, but proves necessary. And a data migration project, when a related system is upgraded separately. None of these costs was hidden or improper. Each was disclosed somewhere, or was a foreseeable consequence of running the system. What was missing was a life-cycle view at the time of the decision. The board treated the ongoing component as minor and predictable, when it was the largest part of the true cost. Now Renata faces a trade-off. Keep the system in place, or move to a vendor whose stated ongoing costs are lower. But switching would bring a new implementation cost, and a period of disruption. Her reasoning, going forward, is simple. Every technology proposal to the board gets judged on all four life-cycle components, with the ongoing figure estimated explicitly.
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