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Impact of IT on Operating Business


The report on Impact of IT on operating business is mainly prepared
for the course Introduction to Information Technology. This report is
mainly prepared for the partial requirement of the course. This report is
basically assigned to get an exposure of the positive and negative impact of
IT on operating business. In this report, we basically try to know The
impact of IT on operating business & how to avoid negative
impacts. This report is authorized by our course teacher Mohammed
Mizanur Rahman, Lecturer, Dept. of AIS.,Comilla University.


This study is designed to know the following aspect:
To collect general knowledge about IT and its impact on business
To get an exposure to the real business world activities through the use
of IT.


This report is intended to provide knowledge about Information
Technology, its impact on 0perating business. The paper includes an
overall view of both positive and negative impact of IT on operating
business and how to avoid negative impact of IT on operating business.


For our report purpose, we have gathered great deal of information about
Information Technology and its impact in operating business. We have
worked with information technology which is operating in business sector in
Bangladesh. Data have been obtained from the different books, annual
report, newspaper, magazine, internet etc.

Impact of IT on Operating Business


Preparing the term paper we have faced some obstructions which are:
Lack of proper information in the websites about the operation of Information
Lack of required information in the text book.
Lack of necessary information in the journals and magazine.
Lack of experience.


Impact of IT on Operating Business

Information Technology is a new aid factors for the trade, commerce and
industry in Bangladesh. Now- a- days, IT sector plays a crucial role in the
modern business.

In the present day development of any country mainly

depends on information technology. The role of IT sector for economic

development of any country cannot be denied. Information technology
makes todays business easier, faster, and profitable. In our term paper we
tried to show a causal link between IT and business

development in


Information technology (IT)









telecommunications equipment to store, retrieve, transmit and manipulate

data. The term is commonly used as a synonym for computers and computer








technologies such as television and telephones. Several industries are

associated with information technology, including computer hardware,
software, electronics, semiconductors, internet, telecom equipment, ecommerce and computer services. Information Technology infrastructure is
the integrated framework upon on which digital networks operate. This







database management devices, and a regulatory system.

Background of IT







communicating information since the Sumerians in Mesopotamia developed


Impact of IT on Operating Business

writing in about 3000 BC, but the term information technology in its modern
sense first appeared in a 1958 article published in the Harvard Business
Review; authors Harold J. Leavitt and Thomas L. Whistler commented that
"the new technology does not yet have a single established name. We shall
call it information technology (IT)." Their definition consists of three
categories: techniques for processing, the application of statistical and
mathematical methods to decision-making and the simulation of higher-order
thinking through computer programs.
Based on the storage and processing technologies employed, it is
possible to distinguish four distinct phases of IT development: premechanical

(3000 BC

1450 AD),



electromechanical (18401940) and electronic (1940present). This article

focuses on the most recent period (electronic), which began in about 1940.


With the introduction of IT the business world changed forever. IT not only
consists of tangible pieces of equipment, but also represents the capacity of
the organization to produce, disseminate, and digest information. IT has
been used in a number of ways including the mechanization of information
processing, the

augmentation of knowledge work, and the support of

coordination in the organization. Sufficient IT investment is for basic

mechanization of the records of production and distribution of goods and
services (e. g. invoices) or for actions like themselves, electronic money
transmit. Technology is also used for manufacturing (such as CAD/CAM) and
computer- integrated manufacturing (CIM). A centralized database enables
production and dissemination of information for management control as a
by-product of mechanization.


Impact of IT on Operating Business

Importance on Technology in Business

Technology is essential to the success of many businesses. No matter the
size of your enterprise, technology has both tangible and intangible benefits
that will help you make money and produce the results your customers
demand. Technological infrastructure affects the culture, efficiency and
relationships of a business. It also affects the security of confidential
information and trade advantages.

Communication With Customers

Technology affects a firm's ability to communicate with customers. In today's
busy business environment, it is necessary for employees to interact with
clients quickly and clearly. Websites allow customers to find answers to their
questions after hours. Fast shipment options allow businesses to move
products over a large geographic area. When customers use technology to

Impact of IT on Operating Business

interact with a business, the business benefits
communication creates a stronger public image.



Efficiency of Operations
Technology also helps a business understand its cash flow needs and
preserve precious resources such as time and physical space. Warehouse
inventory technologies let business owners understand how best to manage
the storage costs of holding a product. With proper technology in place,
executives can save time and money by holding meetings over the Internet
instead of at corporate headquarters.

Business Culture and Class Relations

Technology creates a team dynamic within a business because employees at
different locations have better interactions. If factory managers can
communicate with shipment coordinators at a different location, tensions and
distrust are less likely to evolve. Cliques and social tensions can become a
nightmare for a business; technology often helps workers put their different
backgrounds aside.

Most businesses of the modern era are subject to security threats and
vandalism. Technology can be used to protect financial data, confidential
executive decisions and other proprietary information that leads to
competitive advantages. Simply put, technology helps businesses keep their
ideas away from their competition. By having computers with passwords, a
business can ensure none of its forthcoming projects will be copied by the

Impact of IT on Operating Business

Research Capacity
A business that has the technological capacity to research new opportunities
will stay a step ahead of its competition. For a business to survive, it must
grow and acquire new opportunities. The Internet allows a business to
virtually travel into new markets without the cost of an executive jet or the
risks of creating a factory abroad.


Technology has positive affects on global business. The Internet makes it
possible for people to communicate easily with associates in other countries.
Ecommerce makes it possible for consumers to purchase almost anything
from almost anywhere. And the flow of information is fast and often free once
you have paid for Internet access. Technology has changed much of the
world, but the effects are rarely more pronounced than in the area of
business. Businesses today use technology in almost every facet of
operation. They communicate with advanced network systems; they analyze
data and plot forecasts using complicated programs; they utilize all types of
digital media for marketing campaigns; and they streamline operations with
new inventory and check-out systems.


Impact of IT on Operating Business

However, technology also has negative impacts on business. Technology is
not without its downsides, but business cannot deny the impact it has had on
every level .Here we are discussing about the positive and negative impact
of IT on operating business.


No matter the size of your enterprise, technology has both tangible and
intangible benefits that will help you make money and produce the results
your customers demand. Technological infrastructure affects the culture,
efficiency and relationships of a business. It also affects the security of
confidential information and trade advantages. the most important positive
impacts of IT on operating business are discussed below:
Two types of positive impact :
1. Key impact
2. Others impact

IT significantly affects strategic options and creates opportunities and issues
that managers need to address in many aspects of their business. This page
outlines some of the key impacts of technology and the implications for
management on:


E-Commerce is the buying & selling of goods & services or the transmitting
of funds or data, over an electronic network, primarily the Internet. Internet
Commerce is the use of the Internet for all phases of creating and completing
business transactions. Various surveys suggest that the amount of business
conducted online will increase ten-fold over the next few year.

Impact of IT on Operating Business

In our view too much focus of electronic commerce to date has been put on
carrying out the final transactional phases - the ordering and payment. While
such a perspective is all right when there are established supply chains for
regular and routine purposes, this overlooks the wider perspective. Thus, in
its broadest sense we view Internet Commerce as also including:

The full sales and marketing cycle - for example, by analysing

online feedback to ascertain customer's needs

Identifying new markets - through exposure to a global audience

through the World Wide Web

Developing ongoing customer relationships - achieving loyalty

through ongoing email interaction

Assisting potential customers with their purchasing decision for example by guiding them through product choices in an intelligent

Providing round-the-clock points of sale - making it easy for

buyers to order online, irrespective of location

Supply Chain Management - supporting those in the supply chain,

such as dealers and distributors, through online interaction

Ongoing Customer Support - providing extensive after-sales support

to customers by online methods; thus increasing satisfaction,
deepening the customer relationship and closing the selling loop
through repeat and ongoing purchases.

This wider perspective of Internet Commerce - as an ongoing iterative

relationship that uses email, discussion lists, and other Internet facilities as
well as the World Wide Web - is the strategy of most successful
'Entrepreneurs'. As in other marketing, the main categories of Internet
Commerce are business-to-business and business-to-consumer.


Business Strategy


IT creates new opportunities for innovation in products and services.

Impact of IT on Operating Business
Services which used to be delivered in person can now be delivered over
networks. Among the key levers are:

resequencing: including parallel processing of data-bases

simultaneity: making information instantly available in several

systems (e.g via OLE)

time extension: offering 24 hour a day; 365 days a year service

portability: taking service and products closer to the user

reusability: using information captured for one purpose (e.g.

transactions), and using for others (e.g. customer targeting)


Organization culture

Newer types of IT such as electronic mail and groupware are creating

significant changes in the way that information flows around group ware, and
between them and their customers and suppliers. It can hasten the
development of more open and innovative cultures. However, as experts like
Davenport warns, and surveys from companies like Reuters confirm, the
notion that "information is power" still reigns large in many orggroup
warelso, our experience shows that many new systems fail to become
accepted by their users, because the systems developers have not been
culturally sensitive to the department or group ware, in which the new
systems are to be used.

Organization Structure

For many years it has been argued that IT will enable larger spans of control
and the flattening of group ware. This has at last happened, but due as much
to initiatives like BPR (business process reengineering) and the drive to cut
costs. Research on whether IT encourages centralization decentralizations
produced ambivalent results. Many companies have centralized operations
(for efficiency) while at the same time decentralized activities. It now seems
clear that IT enables a greater variety of structures. In particular it
enables more flexible and fluid structure.

Management Processes


IT is rapidly entering the era where it supports unstructured management

processes as well as highly reutilized business processes. It provides more

Impact of IT on Operating Business


Other positive impacts of IT are given below:


Product Development

Information technology can speed up the time it takes new products to reach
the market. Companies can write product requirement documents by
gathering market intelligence from proprietary databases, customers and
sales representatives. Computer-assisted design and manufacturing software
speed up decision making, while collaborative technologies allow global
teams to work on different components of a product simultaneously. From
innovations in microprocessors to efficient drug delivery systems,
information technology helps businesses respond quickly to changing
customer requirements.


Stakeholder Integration

Stakeholder integration is another important objective of information

technology. Using global 24/7 interconnectivity, a customer service call
originating in Des Moines, Iowa, ends up in a call center in Manila,
Philippines, where a service agent could look up the relevant information on
severs based in corporate headquarters in Dallas, Texas, or in Frankfurt,
Germany. Public companies use their investor relations websites to
communicate with shareholders, research analysts and other market


Process Improvement

process improvement is another key IT business objective. Enterprise

resource planning (ERP) systems allow managers to review sales, costs and
other operating metrics on one integrated software platform, usually in real

Impact of IT on Operating Business

time. An ERP system may replace dozens of legacy systems for finance,
human resources and other functional areas, thus making internal processes
more efficient and cost-effective.


Cost Efficiencies

Although the initial IT implementation costs can be substantial, the resulting

long-term cost savings are usually worth the investment. IT allows
companies to reduce transaction and implementation costs. For example, the
cost of a desktop computer today is a fraction of what it was in the early
1980s, and yet the computers are considerably more powerful. IT-based
productivity solutions, from word processing to email, have allowed
companies to save on the costs of duplication and postage, while
maintaining and improving product quality and customer service.


Competitive Advantage

Cost savings, rapid product development and process improvements help

companies gain and maintain a competitive advantage in the marketplace. If
a smartphone competitor announces a new device with innovative touchscreen features, the competitors must quickly follow suit with similar
products or risk losing market share. Companies can use rapid prototyping,
software simulations and other IT-based systems to bring a product to
market cost effectively and quickly.



Companies that survive in a competitive environment usually have the

operational and financial flexibility to grow locally and then internationally. IT
is at the core of operating models essential for globalization, such as
telecommuting and outsourcing. A company can outsource most of its
noncore functions, such as human resources and finances, to offshore
companies and use network technologies to stay in contact with its overseas
employees, customers and suppliers.

Impact of IT on Operating Business



Technology allows businesses to do everything faster. Many processes that

once required ledgers, checkbooks and journal notations have now moved
onto computer systems Logging in and out, updating inventory information
and communicating can now happening much more swiftly. This allows
businesses to react immediately to any changes.businessman works outside
of the office.



A properly designed computer program does not make any mistakes, and its
computations (not its inputs) are free from human error. This means that a
calculation done by a computer program (like Excel) will always be accurate


Impact of IT on Operating Business

and trustworthy. Unless the coding or the inputs are wrong, there is no
chance a program can produce inaccurate data.

Computer reports



Technology moves very quickly, constantly evolving and creating new

devices and faster systems. Businesses note these changes and attempt to
move with technology, adapting it to their present and future needs while
also keeping a wary eye on the technology competitors are using. The end
result is an increase in the evolution of technology and its application to
business, a process by which everyone benefits.

co-workers using handheld portable devices.


Impact of IT on Operating Business


Business Relationships

Internet technology -- such as chat rooms, Skype and other software -- has
made it possible to hold meetings without all parties being physically present
in the same place. A drawback is that meeting with somebody over the
Internet is much less personal than meeting face-to-face. Internet technology
in business decreases the personal aspect of business relationships.
Business people used to network in restaurants and on golf courses. Today,
the lack of physical proximity decreases brainstorming and other
communications that use a personal touch.


Increases production and saves time

Business use technology to automate tasks. A good example is a bakery

which uses automated temperature censors to detect any drop or increase in
room temperature in a bakery. These censors will send information directly to
the operator and report any temperature change. This saves the bakery time
and it also results into quality products.

Improves data storage and file management

Businesses use cloud hosting services to store and backup business data.
Also it saves on paper work and makes transfer and access of data remote.
With services like, business owners can access their data
any time any where. Information and data are very important tools for a
business, so it is very essential to store them safely and also access them at
any time of need.


Improves financial management

Accounting software like Quick Books , Bookkeeper , Sage 50 , and

Account Edge can be used in performing various accounting tasks in a
business. Business owners can easily balance their books with less
experience in accounting because these softwares are well equipped with
every tool needed in accounting and they also have a help section which can
be referred to in case a user is stuck.


Cuts costs of operation and increases on ROI


Impact of IT on Operating Business

Communication technology and social technology have made business
promotion and product launch affordable. Many small business have found
ways to use social technology to increase on their brand awareness and get
more clients at a minimal cost. In business, factors like cost of operation play
a big role in the development and growth of that business. So when
businesses use information technology to cut down on costs of operation,
then their ROI will increase which will result into business growth.


Improves business to consumer relationship

Businesses have embraced the social technology to interact with their

consumers and fans. This creates a strong business to consumer relationship
and it results into business growth and expansion. Information technology
can be used to improve customer service in so many ways. For example,
businesses can use internet to inform their customers about great deals and
discounts, this makes customers feel special and it can drive their desire to
buy. A good customer service can be used as a great tool by any small
business to gain competitive advantage.


Improves on business competitive advantage

Companies have used technology to gain competitive advantage over their

competitors. A business will improve on its technology and improve on its
services and products which will make its customers happy, this will turn
these happy customer loyal to that business and also invite more friends to
use that service or product.


Impact of IT on Operating Business

The Impact of Information Technology on Small Business

Technology has changed the way people do business. Technology provides a

wide range of tools entrepreneurs can use to guide their new companies
through the startup and growth stages. Small-business accounting,
marketing and communication have been revolutionized by advances in
computer, network and communications technology, and businesses in a
range of industries continually adapt to take full advantage of technological

Setting up and managing a new accounting system can be a daunting task
on your own. Modern accounting software packages simplify the process of
setting up accounts and posting daily transactions. Managing accounts with
a small-business accounting package such as Microsoft Money or QuickBooks
can eliminate the need to hire full-time or third-party accountants.
Accounting software also assists managers by creating informative reports
and financial statements to increase decision-making effectiveness.

Impact of IT on Operating Business

The Internet
The Internet has all but leveled the playing field for small-business marketers
competing against established businesses. With advanced video and
graphics editing software, small-business owners can create professional
marketing materials that reach thousands or millions of viewers online.
Entrepreneurs can take advantage of cost-efficient web marketing tools such
as Google AdWords to spread targeted marketing messages to a broad
audience or a select niche. Several small businesses can share expensive
advertising space online through banner- and traffic-swaps.

Startup Costs
Despite the numerous advantages granted by modern technology, there are
still drawbacks to technology's inseparable relationship with the business
world. One such drawback is the increase in startup expenses for new
businesses. Almost every new business requires computer workstations,
multiple telephone lines and network infrastructure before it can begin
operations. Bootstrap entrepreneurs can often get away with using their own
PCs and cellphones during the startup phase, but serious new ventures
undertaken by experienced entrepreneurs usually involve large infrastructure
projects to accommodate rapid growth.

Time Management
Time management is crucial for any small-business owner. Freeing up time
from administrative minutiae can allow you to focus on more productive
activities, such as drumming up new business and making vital contacts with
suppliers and potential strategic partners. Advances in computer and cellular
telephone technology allow business owners unprecedented access to indepth scheduling and customer relationship management software, enabling
busy entrepreneurs to hold "face to face" meetings online, from anywhere in
the world.


Impact of IT on Operating Business


In spite of having so many positive sides IT has some negative impacts also.
They are mentioned below:



While technology is useful, its fast pace and complex systems can be
confusing. If companies want to update their systems or change the type of
technology they use, they have to retrain not only employees, but often
customers. New employees must also be trained in using business systems,
which can create confusion.



Technology is very available, meaning that it is easy for competitors of all

sizes to use and learn. This makes it difficult for businesses to keep up with
technological changes and vastly increases the number of competitors in
their market as smaller business can use technology to offer value to a wider
range of consumers.


Impact of IT on Operating Business

a small business owner



Technology also increases the possibility of crime. A tech-savvy employee

can embezzle funds and make it difficult for the company to trace. Hackers
can access personal and financial data of customers who trust the company
to keep their information safe. Businesses must spend time and money
developing safeguards against these events.


Impact of IT on Operating Business

computer log in screen


Employee Morale

Installing monitoring software in the workplace sends the message to

employees that the company does not trust them, according to research
done under the aegis of professor Howard Besser while teaching at New
York University. Giving employees responsibility, trust and respect boosts
their morale and productivity. Showing them that they are not trusted and
must be recorded decreases morale and worker productivity. This is true
regardless of the actual reasons for installing monitoring software, according
to the same research.



Spam refers to unwanted and unsolicited email messages. Spam is

widespread and has negative impacts on business, according to the article
"Impact of Information Technology on Global Business" published by Purdue
University. Wading through spam email is a waste of time, and spam filters
can only do so much. Users of spam filters must then check for necessary
email messages diverted incorrectly as spam.


Brick and Mortar

The popularity of ecommerce has had a negative impact on brick-and-mortar

retail stores. Smaller stores are finding more and more difficult to compete
with both Internet businesses and larger retail stores. For example, small
community bookstores must compete with as well as large
stores such as Barnes & Noble that sell in person and online. Sometimes the
smaller stores end up going out of business.


Implementation Expenses

Small businesses fail to afford this expensive technology so they end up

losing their clients to a business which has improved its technology and
provides a better service or product.


Job Elimination


Impact of IT on Operating Business

Technology has replaced most positions which humans used to occupy.
Accounting is now being done by software, so accountants run out of

Security Breaches

Since businesses store their data on remote cloud servers which can be
accessed with a user name and password, they risk losing that data to wrong
minded knowledge works, hackers or viruses, which can harm he business.


Four important steps :
To prevent the harmful impact that this negative side of technology could
have, personal finance expert Jean Chatzky developed 4 steps for
avoiding them. These four steps help reduce the dangers of identity theft,
hacking, and other unfortunate incidents.
Chatzkys first step is to be very careful with WiFi-enabled devices. She
recommends that businesses set up passwords for their wireless devices to
prevent people from tapping into their system.
"For every wireless node thats sent out today, there is a program when
setting up that allows you to decide whether you want to use security." He
went on to say that it, "blocks outside people from getting into the system
without having to do fancy footwork," said Jay Foley, the executive director of
the Identity Theft Resource Center.
Some small businesses do not have physical locations and often do their
work in places such as Starbucks or Panera Bread. Since these places have

Impact of IT on Operating Business

public networks, Chatzky suggests that people avoid looking at confidential
documents and materials while they are there.
Secondly, she offers a warning about jump drives. Its hard to believe that
the little thumbnail drives that make it so easy to transfer files could be
dangerous. To clarify, its not the actual drives that are dangerous, but its
what could happen with them that is dangerous. For example, what if an
employee took a jump drive home that contained important business files
and plugged it into a computer that was infected by a virus? You can see that
the computers at the office could then be easily infected as well.
Aside from the fact that company property should not go home, businesses
should also install anti-virus software on the office computers to prevent a
negative effect.
Another area that could cause potential harm is transaction systems.
Chatzky says that businesses need to constantly check their credit card
machines for signs of tampering. Thieves often set up these systems in a
way that creates a duplicate copy of all the credit card information.
According to Foley, businesses should install security cameras and train
employees to watch for this type of behavior.
Lastly, paper can also be a technological concern. Now, you might be
blinking or scratching your head, but it does fall into this same category of
security concerns. We all know that technology has replaced paper in many
cases, but there are a lot of places that still rely on hard copies. Doctors
offices, for instance, still use a lot of paper filing systems. However, they
dont always treat them the same way they treat their digital files. For this
reason, Chatzky says that businesses should be sure to utilize tools such as
shredders to provider security to both them and their customers.
These security protections may seem small, but they could end up saving
your business from hacking, identity theft, and more.

The Role of Information Technology in Business

The role of information technology systems in a business environment can be
classified into four broad categories. These categories include function
performance, communication through networking, management and

Impact of IT on Operating Business

enterprise roles.
1. Function IT Systems
Function IT systems are applications that allow individuals to function
effectively in the workplace. Examples of common IT systems that enhance
workplace functions are word processor applications, spreadsheet
applications, statistical analysis software and computer aided design (CAD)
programs. Employees can work and perform their task individually or
collectively using these specialized software technologies.
2. Network IT Systems
Network IT systems allow effective communication within and outside an
organisation. Examples range from simple e-mail (electronic mail) to blogs,
wiki sites, IM (instant messaging) and electronic conferencing systems.
These types of technologies promote interaction and collaboration among
working groups and also facilitate quick information flow at all levels.
3. Management IT systems
Management IT systems(MITS) can be defined as planned applications that
are designed to process data and transform the processed data into useful
information for management decision making.
Basic examples of management information systems are human resources
management systems, financial management information systems and
marketing management information systems.
4. IT Systems
Enterprise IT systems are technologies designed to integrate and manage
entire business processes for large organisations. Typically, enterprise
application software is hosted on large servers over a computer network.
Transmission of information can either be internal or external.
Examples of enterprise information systems may be accounting software,
health care specific software or Electronic Data Interchange (EDI). Another
good example of software application within this category is Customer


Impact of IT on Operating Business

Information technology has helped in shaping both the business world
and our society in general. Many fields have been impacted by information
technology and these include; education , health , entertainment ,
communication just to mention but a few. The impacts of information
technology on operating business are profound. Companies rely on IT for fast
communications, data processing and market intelligence. IT plays an
integral role in every industry, helping companies improve business
processes, achieve cost efficiencies, drive revenue growth and maintain a
competitive advantage in the marketplace.
As the world develops, more technology will emerge and this technology will
have both positive and negative impacts. Information Technology has so
many positive impacts. IT has some negative impacts too. But business
cannot deny the impact it has had on every level.

Impact of IT on Operating Business