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International Journal of Advanced Science and Technology

Vol. 20, July, 2010

Extra-Organisational Systems: A Challenge to the Software


Engineering Paradigm

Dr.D.S.RAO
Dr.dsrao@yahoo.in
HCL Info systems sdn bhd. Malyasia.
Co-Authors
Disha.Handa ,Gaurav Bagga , Ajay Kumar Rangra
Nandini Nayar ,Karan Bajaj ,Shweta Rajput
K.V.Praveen, Vanita.Jaitely

Abstract
Vulnerability is discussed in the context of data processing and information management
applications. It is argued that a new class of information technology applications must now
be recognised, in which one or more organisations cooperate with small enterprises and
private individuals. The term 'extra-organisational systems' is coined for such applications.
Using illustrations arising from studies in the field of consumer EFTS, it is shown that the
public is generally regarded as 'usees', beyond the system and affected by it, rather than as
part of the system. It is argued that conventional systems life-cycle notions and techniques are
inappropriate to extra-organisational systems. Rather than the software engineering,
artefact-oriented philosophy inherent in existing techniques, such systems demand an
alternative organically-based paradigm.

1. Introduction

It is conventional to define vulnerability as "the possibility of loss, injury or denial of


equal rights to a significant segment of the population, the weakening of social
stability, or risks to national sovereignty due to dependency on computer-based
information-technology" (TDR 1981). A variety of sources of risk arising from
information technology (IT) have been classified, and a variety of dimensions
identified, including individual, organisational, economic, social and national
sovereignty (SÅRK 1978, 1979; Hoffman 1986; Holvast 1989; Berleur 1992).

Parallel with the literature on vulnerability, a number of related areas have developed,
especially safety-critical systems and system- and software-safety (e.g. Neumann
1979-, 1986, 1989; Malasky 1982; Perrow 1984; Leveson 1984, 1986, 1990, 1991;
Parnas 1985; Smith 1985; Borning 1987). Systems engineering defines safety
management as the measures taken to reduce the risk of accidents and of hazards,
where the term 'hazard' means a set of conditions that can lead to an accident
(Leveson 1991). Other relevant areas include software quality assurance (AS3563
1991), trusted systems (DoD 1987), risk management (Shain & Anderson 1989),

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information systems failures (Lyytinen & Hirschheim 1987), disaster recovery


planning (Toigo 1989) and service continuity planning (Brunnstein 1991).

Vulnerability is usually discussed in the context of artefacts which manipulate the


environment, such as process control, transportation control and weapons guidance
systems. Vulnerabilities also arise, however, in respect of quite banal IT applications.
Employees' interests are threatened by inadequacies in a payroll system, and by
insensitively designed features of a personnel or human resource management system.
Affluent people rely on the convenience and consistent availability of banking
systems. Social welfare clients are highly dependent on the systems used by
government welfare agencies, and in countries in which welfare payments are now
made into clients' accounts with financial institutions rather than by cash or cheque,
welfare beneficiaries too are heavily dependent on banking systems.

This paper focusses on human vulnerabilities in such more conventional, unromantic


and seemingly harmless data processing and information management applications.
Its thesis is that:

• an increasing number of systems have a character quite different from the


stereotyped administrative data processing system;
• this character embodies very important and easily overlooked vulnerabilities,
at least of an individual and social nature; and
• conventional methods and techniques, and the philosophy underlying them,
are inappropriate to such systems.

The paper commences by reviewing classes of systems previously identified in the


literature, and the vulnerabilities associated with them. It identifies the need for a new
class of system, for which the term 'extra-organisational' is coined. Subsequent
sections identify weaknesses in conventional approaches to the conception,
development and operation of extra-organisational systems, and suggest how the
social vulnerability inherent in such systems can be significantly reduced.

2. Intra-Organisational Systems

Early applications of computers within organisations were oriented toward the


automation of hitherto human tasks. It was soon found that a degree of rationalisation
could be undertaken - the computer offered an opportunity to re-define the functions
being performed. As the capacity of computing equipment grew, systems increased in
scope, and integrated what had previously been separate business functions. The
boldness and the capabilities of the new breed of programmers increased, and the
seeds were sown for the technological self-confidence of contemporary systems
designers.

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During this period, which we can retrospectively dub the 'intra-organisational


systems' era, it was claimed that computers were a productivity tool, and that the
natural corollary was job-displacement. In practice, it appears that the early decades
of intra-organisational computer applications may have resulted in more and better
quality work being performed, but by comparable numbers of employees: evidence of
actual increases in the gross productivity of labour has been hard to find (Franke
1987). By the end of the 1980s, however, the sophistication of IT had reached a point
at which the long-promised reductions in staffing were beginning to be measurable,
particularly in the information industries such as banking, and particularly in middle-
managerial ranks.

Apart from the job-displacement issues, which are briefly discussed later in this
paper, other vulnerabilities were created, but were seldom considered in a cohesive
and systematic fashion. For example:

• organisations were heavily dependent on the 'priestly caste' of computing


specialists, and new forms of crime arose, in which data processing managers
sub-let excess computing capacity, and pocketed the resulting fee;
• clerical staff were relieved of the tedium of their previous mechanical tasks,
and had it replaced with the boredom of capturing data into machine-readable
form, and bursting, decollating, folding, enveloping and delivering copious
quantities of computer output (Iacono and Kling 1984);
• automated monitoring of worker performance became increasingly feasible
(Marx and Sherizen 1986, OTA 1987), and has been increasingly applied
(Rule and Brantley 1991); and
• to the existing repertoire of bureaucratic obstructions and excuses was added a
new and potent one: 'the computer' could now be blamed for errors, and be
invested with authority. The 'social distance' of people from the institutions
which dealt with them was thereby exacerbated.

An area in which considerable maturation in systems life-cycle thinking has been


apparent is the gradual appreciation that systems cannot be viewed only from the
perspective of the system owner. The interests of 'users' have been increasingly
recognised, not for altruistic reasons, but because lack of 'user involvement' has been
shown to undermine systems' acceptance, and hence payback on the investment. To
date, however, the interests of people affected by the system but external to the
organisation, referred to within the IFIP TC9 community since the mid-1980s as
'usees', are seldom reflected.

An important development, traceable to the 1960s, has been the marriage of


computing and telecommunications. This made the power of the computer available
to organisational units remote from the central site, through such innovations as
remote job entry (RJE) and terminals. Some applications of the emergent 'information
technology' were more revolutionary. In passing beyond the organisation's
boundaries, they ushered in new forms of information systems.

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3. Inter- and Multi-Organisational Systems

The early inter-organisational systems involved the installation of terminals on the


sites of an organisation's primary business partners. More sophisticated arrangements
involve direct links between mainframes and/or front-end processors, and more
recently inter-networking via third-party communications facilities. By definition, a
degree of trust already existed between business partners, and hence security features
had time to mature.

Inter-organisational applications continue to emerge, and to increase in power and


complexity. In recent years they have been much-touted, and to some extent used, as a
basis for implementing organisational strategies, and for realising competitive
advantage through corporate collaboration and alliances (Kaufman 1966, Malone,
Yates and Benjamin 1987, Wiseman 1988, Johnson and Vitale 1988, Rockart and
Short 1989, Konsynski and McFarlan 1990, Brousseau 1990, Oesterle 1991).

Inter-organisational systems are essentially pairings of business partners. Each


organisation may develop links with more than one important partner, but each link is
largely independent of the others. Over time, however, economies of scale have
become important, and organisations have tended to develop a technical infrastructure
which serves the needs of each of the links. Third parties have grasped the
opportunity of making a business of offering services to multiple user-organisations.

The natural result of this increase in sophistication has been the emergence of 'multi-
organisational' systems. These can be distinguished from inter-organisational
applications in that they are designed to support multiple linkages with many
organisations, and, in principle, with any other organisation with which there is a need
to communicate. Particular forms include:

• electronic mail (e-mail);


• electronic funds transfer systems (EFTS);
• electronic data interchange (EDI); and
• on-line trading.

In each case, standards and interfaces have been established, and appropriate controls
and security features imposed.

Many different flavours of multi-organisational system have emerged. Some of them


essentially automate existing relationships and flows, while others represent
wholesale revolution. Some have been used as instruments of competitive aggression,
and some to protect the existing industry configuration. Some are organised along
industry-sectoral lines, whereas others cut across industry boundaries (Clarke 1991).

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The creation of multiple, linked intra-organisational systems had created


inefficiencies, because data captured into machine-readable form in one organisation
was being printed, sent by physical means to another organisation, and then re-
captured. This was not only inefficient in terms of unnecessary data capture steps, but
also because it involved significant error-levels, expensive consequences, and
detection, investigation and re-work. Most such errors are in principle avoidable, and
well-designed inter- and multi-organisational systems are in the process of removing
these inefficiencies. This is part of what Wiener (1949), Forrester (1961) and Beer
(1975) had in mind when they proposed the application of cybernetics to industrial
organisation.

The removal of inefficiencies is, of course, a cause for rejoicing, because it means that
society can produce more goods and services for the same amount of labour input.
There is, however, an inevitable negative impact on those employees who are
displaced, and on their dependants, at the very least during an interim period while the
person finds a new job.

To the extent that displaced people prove unable or unwilling to re-train and/or re-
locate, the impact can be severe. Under some conditions, moreover, the impact may
be long-term, when, for example:

• the economy is unable to generate new employment opportunities for those


displaced. This seems particularly likely to arise if the limits of the society's
consumptive capacity are being approached; and/or
• there are fixities in the working environment, such as legal barriers to
accepting low wages, or migration hurdles.

Where long-term unemployment results, the consequences for the people affected can
be very severe, particularly if there is an inadequate 'safety net'. Given that the main
avenue for distributing national income to people is on the basis of their employment,
social vulnerability appears to be now arising from the more advanced forms of
applications of IT in commerce, industry and government.

Apart from the work-and-income issue, other vulnerabilities have emerged in greater
number, and of greater severity, during this era. For example:

• data has flowed across corporate boundaries, generally without the data
subject's knowledge or consent, and with reckless disregard for the
misunderstandings inevitable from its loss of context. Legislative activity
throughout the world has imposed fair information practices on some of these
flows, but has in the process legitimised the flows themselves; and
• the scope for bureaucratic procrastination and obstructionism has become even
greater, because the inadequacies of not only the organisation's own
computer(s), but also those of the computers of other organisations can be
blamed, or their authority invoked.

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Inter- and especially multi-organisational systems appear certain to develop further


during the coming years, and vulnerability issues will clearly require a great deal of
attention.

The following section distinguishes a related class of IT application which has not to
date received attention in the literature.

4. Extra-Organisational Systems

Implicit in the notions of inter- and multi-organisational systems are the assumptions
that each of the nodes of the network is professionally managed, and that the facilities
are used in an organisational context, with all of the discipline and cultural constraints
that entails. These assumptions are important, because business partners depend on
one another's professionalism in relation to such matters as:

• security and control (e.g. physical access constraints, password management


and backup);
• data quality;
• the reliability and responsiveness of decision and action; and
• preparedness to take legal and moral responsibility for their decisions and
actions.

There is an increasingly large number of systems which transcend the boundaries of


an individual organisation, but for which these assumptions do not hold, such as:

• Automated Teller Machine (ATM) services;


• Electronic Funds Transfer at Point of Sale (EFT/POS) services;
• electronic home and office banking services;
• public database access, such as electronic yellow pages and digital telephone
call routing systems;
• public transaction services, including:
• tele-shopping;
• public entertainment and travel reservation services; and
• the sale of information-based services such as insurance; and
• electronic lodgement services for official submissions (such as taxation
returns, statistical summaries and registration forms).

In these cases, many of the organisation's 'business partners' are small, single-site (and
in many cases single-person) enterprises, such as retail outlets and service agents, or
are members of the public. These partners do not have professional IT managers with
an understanding of such arcane arts and technologies as systems analysis and
communications protocols. Despite this, some of them will reliably and consistently
perform the intended functions, and interpret their interaction with the facility in the

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way the designer intended. It would be a highly idealistic designer, however, who
relied upon all, or even a large percentage of these partners to do so.

In passing, it is noted that a complete taxonomy of IT applications must also include


person-to-person or public systems, such as electronic bulletin boards and 'CB'
services. Vulnerabilities arising in the context of such systems are identified and
discussed in Dunlop and Kling (1991).

The following section draws on prior research relating to one particular form of extra-
organisational system, to identify some specific instances of vulnerabilities, and trace
the origins of those weaknesses to the philosophy and methods of contemporary
systems life-cycle thinking.

5. The Case of Consumer EFTS

A variety of studies of electronic funds transfer systems have been undertaken (see, in
particular, Kling 1983). This section draws heavily on studies of consumer EFTS in
Australia (Walters 1989, Clarke and Walters 1989, Clarke 1990a and 1990b, Clarke
and Greenleaf 1990, APSC 1990); and in Switzerland (Clarke 1992).

Consumer EFTS may be defined narrowly, to include only ATM services and point of
sale systems in merchants' premises (EFT/POS), in which value is transferred
between accounts on the basis of data captured from a card inserted in a remote
terminal and an associated keyboard. A broader definition includes all transactions in
which the magnetic-stripe on a credit- or debit-card is used to effect payment, whether
with or without use of a personal identification number (PIN). Used in this less
restrictive manner, the term also covers remote banking services from home or office,
and card-facilitated tele-shopping, phone-calls, bill payments and reservations.

Automated Teller Machines were adopted very quickly when they were introduced in
Australia in the late 1970s and early 1980s. Consumers have enjoyed the benefits of
greater convenience, but unfortunately for the financial institutions, the anticipated
large net savings in transaction-handling costs were not realised. This was because the
average size of transactions is now much smaller than was the case before the
introduction of ATMs, and the number of transactions is much greater.

Australia has been among the world leaders in the rate of adoption of consumer
EFTS, but most forms, and especially EFT/POS, have achieved much slower growth
rates than was the case with ATMs. A number of factors were involved, some
peculiar to Australia, but many similar to those which have retarded growth in many
other countries. They included:

• early attempts by several of the major financial institutions to establish a


dominant, proprietary system, followed by an attempt by the cartel of major

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banks to establish a system which kept the non-bank financial institutions


marginalised;
• the long period during which some of the financial institutions refused to
accept that the window of opportunity for competitive advantage through
EFT/POS had passed, and that an industry-wide collaborative scheme was
appropriate and necessary;
• the deliberateness with which the two largest retail chains (responsible for
over 50% of all retail sales) went about their pilot schemes; and
• the unwillingness of the major players to recognise that a large-scale
collaborative system is unlikely to be successful unless all parties stand to gain
from it.

On the basis of successful EFT/POS implementations, it appears that there are several
important features of system architecture:

• 'business openness' (i.e. all terminals need to accept all cards);


• 'architectural openness' (either a common infrastructure, or interoperability
between networks); and
• 'technical openness' (i.e. commitment to international telecommunication
standards), to underpin the first two.

Once these corporate difficulties had been overcome, there remained the question as
to whether consumers would actually use the resulting system. Too little attention was
paid to the interests of the consumer, indicating a failure to appreciate the extra-
organisational dimension of consumer EFTS. In particular:

• consumer education was overlooked;


• the confusion arising from the initial multiple, unlinked systems was
underestimated;
• where terminals were installed on a pilot basis, there were too few of them, or
they were inconveniently located;
• establishment of fair conditions of card use was tardy;
• the reporting of transactions on bank statements lacked detail which many
consumers valued;
• the importance to the customer of being able to check the balance available
prior to committing to the purchase was not understood;
• the importance of the 'cash-out' facility was not appreciated; and
• there was a lack of direct incentives (such as short-term, promotional rebates,
bonuses or lottery-prizes for EFT/POS terminal usage), and of imaginative,
EFT/POS-linked schemes (such as volume-discounts and frequent-buyer plans
for customers who make use of EFT/POS terminals).

It is apparent that successful EFT/POS systems depend on a strong affinity between


the designers and the point-of-sale environment and consumers.

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Debates about the security aspects of Australian consumer EFTS provide further
evidence of the extent to which the consumer was long regarded as being outside the
EFT/POS system, rather than an integral part of it. The Australian finance industry
has been a world leader in the establishment of security standards, and the level of
security is very high (AS2805 1988, Weber 1989). The banks have had, however, an
internally focussed and technically oriented view of security. Some of the deficiencies
during the late 1980s are documented in Appendix I.

No discussion of vulnerabilities arising from consumer EFTS would be complete


without reference to the enormous potential for privacy invasions, both by private
sector organisations (variously for marketing and debt collection reasons), and the
public sector (for person-tracing and location). In most countries, including Australia
and Switzerland, there is virtually no legal protection whatsoever against abuses. This
is an area in which the public may in due course have its say, perhaps by orthodox
lobbying for regulation, perhaps through the boycotting of consumer EFTS, and
perhaps through civil disobedience in the form of habitual provision of false or
misleading identity and other personal information.

During the period 1987-90, steps were taken by a variety of Australian Federal and
State Government agencies to ensure that the financial institutions addressed at least
the most pressing of consumers' concerns (although at no stage to date have privacy
considerations been addressed). One remarkable aspect of the procedure was that the
development and successive reviews of the EFTS Code of Conduct were undertaken
without the formal participation of consumer representatives or advocates.

Despite the litany of inadequacies, the adaptability of both the technology and the
major players has proven to be of a high order, and the confusion and mistrust which
reigned in Australia from 1984 until 1989 is now being overcome, and steady growth
is being experienced. Similarly, the openness and consumer-orientation of consumer
EFTS in Switzerland appears to be resulting in brisker growth rates in transaction
volumes.

The conclusions drawn from these studies of consumer EFTS are that the major
players made costly mistakes as a result of conceiving of the consumer and his actions
as being outside the system boundaries. They treated the system as (at best) a multi-
organisational system, when it was really an extra-organisational application. It was
only when external pressure was brought to bear that the financial institutions were
forced to reflect consumers' interests in their system designs.

Organisations have a clear motivation to reduce their costs by transferring tasks to


other organisations, and to their clients. For relatively high one-time capital costs and
relatively very low recurrent costs, organisations can arrange for their clients to
themselves perform data capture, acquire the organisation's services, and/or access
stored data. For such arrangements to be effective, however, a number of
requirements from the perspectives of all parties must be satisfied. These

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requirements are not readily analysable, because they are subject to interpretation by a
wide variety of players, and are subject to ongoing change. The following section
proposes a shift in the framework within which extra-organisational systems are
developed, which will enable vulnerabilities to be reduced.

6. Towards an 'Organic' Paradigm

The prevalent approach to information systems conception, development and


operation can be depicted as reflecting the attitude of the engineer, confident in his
ability to harness the forces of nature to build bridges across yawning chasms. The
primary concern is with the artefact, comprising hardware, network, electronic traffic
and systems and application software.

This paper is not concerned with the efficacy of that approach to intra-, inter- and
multi-organisational systems. It argues that the software engineering paradigm is
inapplicable to extra-organisational systems, and that an alternative, more open and
'organic paradigm' is needed, based on a less deterministic interpretation of general
systems theory and cybernetics than has been common in recent decades.

The basis upon which the argument rests is that:

• it is pointless defining extra-organisational systems to be bounded by the


human-machine interface, because the system's purposes and performance can
only be measured in terms of its service to its clientele;
• extra-organisational systems are highly complex, not only because of the large
number of participants, but also because of the heterogeneity of the people
involved, and the lack of a common organisational culture to imbue in them a
common ethos and attitudes;
• the dimensions along which the heterogeneity exists are many and subtle,
including educational background, religious/moral persuasion, political
attitudes, cultural traditions, linguistic heritage, etc.;
• the individuals involved in the system make significantly different
interpretations of the system's meaning, both initially and over time; and
• the marketing imperative is operational: if the people don't use it, it won't
achieve its objectives, and thereby repay the large investments involved.

As far as I am aware, the term 'organic paradigm' is original. The concept, however, is
well-established. Presursors include 'sociotechnical systems' (Emery & Trist 1960,
Mumford 1983), Beer (1972, 1975), Miller's 'living systems' (1978), Checkland's 'soft
systems methodology' (Checkland 1981, Checkland & Scholes 1990), the Multiview
approach (Wood-Harper et al 1985), and the stream of thought emerging at the less
mechanistic end of the cognitive science community (Winograd & Flores 1986).

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Winograd and Flores argue:

• for the "rejection of cognition as the manipulation of knowledge of an


objective world";
• for recognition of "the impossibility of completely articulating background
assumptions"; and
• for recognition of "the primacy of action and its central role in language"
(1986, p.11).

With them, I am arguing not for the rejection of rationalism and science in favour of
holism, vitalism or some other ascientific framework, but rather for the re-direction of
the rationalistic tradition.

There are increasing echoes of these kinds of thinking in the management and
management information systems literatures. For example, Ciborra's at first sight
revolutionary arguments about 'designing-in-action' and 'bricolage' (which holds that
systems are not products designed by a master-architect, but rather the result of
tinkering by the many people involved - Ciborra and Lanzara 1989, Ciborra 1991) is
not meeting rejection, but rather being absorbed and rationalised back into the
mainstream of information systems thinking.

7. Conclusions

Vulnerability has been discussed in the context of data processing and information
management applications. A great deal of attention has been paid in the literature to
inter-organisational and multi-organisational systems, and the opportunities, impacts
and management of such systems have become clearly distinguishable from those of
the long-standing class of intra-organisational applications. It has been argued that a
new class of system must now be recognised, which is referred to in this paper as
'extra-organisational'. By this is meant systems in which one or more organisations
cooperate with other entities which are not organisations, but rather are small
enterprises and private individuals. Reports from studies in the field of consumer
EFTS have illustrated ways in which the public is still generally regarded as 'usees',
beyond the system and affected by it, rather than part of the system. It has been
argued that conventional systems life-cycle notions and techniques are inappropriate.

Extra-organisational systems are different and important. Conventional approaches


will not work, and their inadequacies are deep-rooted. The artefact-orientation of
contemporary methods must be mediated by a fuller appreciation of the environment
of application - rather than 'technology', the focus must be on 'technology-in-use'. And
the dominant engineering credo must be replaced by a paradigm which owes more to
organic conceptions of information systems.

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Appendix I: Deficiencies in Consumer EFTS Security From the


perspective of the Consumer Australia, late 1980s

• personal identification numbers (PINs):


o were generally imposed rather than being customer-selectable (and
therefore more readily remembered);
o generally comprised digits rather than letter-combinations (which are
more readily remembered);
o were assigned per account rather than per person (forcing a person
with multiple cards to remember multiple PINs);
• new cards and their associated PINs were generally sent by insecure mail, to
the same insecure letterbox, only a few days apart;
• PIN entry was generally highly insecure, because any person standing close to
the customer could watch the keys as they were struck, unless the person
adopted an unnatural position in order to obscure their finger movements;
• since most receipts carried the account number, many customers discarded
their receipts in the vicinity of the terminal, and many cards carried no hidden
identifier on the magnetic strip, it was not difficult for a thief to create a
serviceable card;
• institutions had no guidelines regarding the security aspects of ATM siting and
hours of operation;
• many ATMs would capture the card after a small number of unsuccessful
attempts to key the PIN;
• for the above reasons most people needed to record their PIN somewhere. But
if they admitted to storing it in the same secure location as the card itself (i.e.
in the only wallet or purse that they carried), then the card-issuer was able to
avoid liability for any losses arising from the theft of the card;
• there was an inbuilt deterrent against reporting a lost card: a card reported
missing was cancelled, and (in most institutions) the account closed. Time-
consuming and inconvenient card-reissue and account-reopening were
necessary. In general a consumer could not request a short suspension to allow
time for a search;
• in general, transactions at EFT/POS terminals were committed once the
confirmation was despatched from the processor. Any subsequent failure of
transmission, display or printing resulted in the customer paying the merchant
twice, once directly to the teller, and once via the (seemingly failed) EFT/POS
transaction;
• financial institutions insisted on adopting a stance (not only in public, but even
in meetings with regulatory agencies) that it was impossible for 'unauthorised
transactions' (i.e. which the customer claimed he or she had not conducted) to
be their fault. This was despite their refusal to disclose details of the security
measures providing the claimed impregnability (which was a tacit admission
that the measures were compromisable), and despite their claims that they

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were steadily upgrading security features, e.g. by moving from session to


transaction keys (which was a tacit admission that their systems could be more
secure than they were);
• the results of security audits of consumer EFTS were not available to
shareholders, let alone customers; yet sustomers were expected to accept the
unreviewed assurances of banks that their security arrangements were in order.

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Ciborra C.U. (1991) 'From Thinking to Tinkering: The Grassroots of Strategic


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