Virtual Organizations, Real Business and National Work

Jorma Kajava


The word ‘virtual’ has acquired a meaning that in some cases approaches the opposite of ‘real’. The current preference tends towards multidimensionality, i.e., that an activity is virtual from one perspective and real from another. We shall draw on our earlier experiences concerning outsourcing of software and information processing, with a special emphasis on information security, to explore the effects of virtual organizations. This discussion soon leads to the question of the distribution of work as globalization makes it easy to transfer mass production to a country where it is cheapest. As some countries are developing products, while others are producing them, we might ask where the balance between these countries is? How could we divide the different activities in the sense of national work? The current discussion around the topic has centred around its business aspects, maybe it is time to start a discussion on its ethical aspects.

The industrial society was characterized by real work, i.e., manufacturing, marketing and business, carried out by people employed by organizations. A weak link in the chain could cause an entire organization to collapse. The activities of organizations were based on real work carried out in the aforementioned areas. The primary goal was business and the secondary goal was employment.

In our modern information society, there’s an ongoing discussion on the distribution of work. Alvin Toffler once said that in the industrial society machines and buildings are a part of an organization’s capital, people comprise only a cost factor. Such a view is no longer considered valid, the current view holds that people with ideas are the most valuable asset of any organization.

At the end of the millennium, information technology offers us new avenues of making business. One such avenue comprises virtual organizations. The basic idea is to focus on the organization’s main activity and cut away all extraneous activities. If the organization is not working within the fields of software or information systems, it might consider the option of outsourcing all or a part of its information processing. It might also consider subdeliveries and benchmarking. At any rate, if the organization does not thoroughly explore its options, it could end up losing money and/or going to the wall. The most potent threats lurk in business and information security.

In this paper, we shall explore virtual organizations through outsourcing. The purpose is to learn about virtual organizations by investigating their effects within a narrowly confined area. Having understood the basics of virtual business, we will be in a better position to predict what the future of the Internet and networks might include.

Outsourcing refers to the use of external companies to perform one or more organizational activities. It can be applied to a host of activities ranging from the use of contract programmers to managing third party facilities. The most common reason for companies to outsource their information systems include cost efficiency and the need to free resources for more essential functions.

The economic aspects of outsourcing will not be examined in this work. Outsourcing will be limited to the clien’s information systems so, for instance, outsourcing software development will not be considered here. Furthermore, this paper does not attempt to describe detailed steps during the implementation of an information security programme or to provide implementation procedures for security controls.

Aspects related to information security are often paid little attention to in outsourcing. This is easy to understand, for outsourcing is a way of making savings, and information security is known to be a difficult, and often very expensive, undertaking. Furthermore, organizations may still think that information security does not bring any profits. It should be borne in mind, however, that breaches of information security may be catastrophic to the organization. Logically, information security should be a justifiable and important consideration for all organizations.

Our modern society with its soft and hard solutions has made the world smaller than ever before. We can transfer our activities to countries where they can be carried out most efficiently. But the question is, are we going back to mercantilism? How should we distribute work in the future – real manufacturing and design and virtual work? We are currently talking about the globalization of work activities and the harmonization of international legislation. Now we must start to talk about the distribution of work, because the global work situation is very serious. We may not have ready solutions to this problem, but we must have courage enough to start the discussion.

The discussion on outsourcing has highlighted the central role of information security work. The experience we have acquired from outsourcing should be applied to electronic commerce and public transactions on the Internet. It has been suggested that the situation should be described by means of graphical presentations. Ethical aspects are rather like security in that their significance should not be underestimated. When it comes to virtual organizations, we must first have a set of commonly accepted values and norms. Then we can start the process of ethical decision making. We have earlier discussed ways of harmonizing national legislations. Now we shall have to start discussing the harmonization of ethics in different countries.

The credibility of electronic activities at large is central to the whole discussion about virtual organizations and Internet business. A fault in the systems or organizations, could result in people, customers, losing their trust in electronic commerce. Thus, transparent security solutions form the basic building blocks of the new society. It might be said that business is based on technology and legislation, but society is based on people, their values and norms, their ethics.