Present and Future Role of IT/IS in Business

Group Number: 3
Name of Students:
Debasis Senapati (PGP/21/143)
Milind Roy (PGP/21/155)
Mohit Mishra (PGP/21/156)
Vinoth Kumar G (PGP/21/185)
Yugandhar Vullakula (PGP/21/186)
Swati Gautam (PGP/21/366)
Shirley Joshua (PGP/21/368)

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

February 2018
Contents

Abstract ...................................................................................................................................... 3

1 Introduction: ....................................................................................................................... 4

2 Literature Review: .............................................................................................................. 6

3 Role of IT/IS Present and Future ........................................................................................ 7

3.1 Finance ........................................................................................................................ 7

3.2 Accounting .................................................................................................................. 9

3.3 Supply Chain Management ....................................................................................... 10

3.4 Sales and Marketing: ................................................................................................. 13

3.5 Customer Relationship Management: ....................................................................... 14

3.6 HR functions ............................................................................................................. 15

4 Discussion ......................................................................................................................... 16

5 Conclusions ...................................................................................................................... 20

References ................................................................................................................................ 21
Abstract
In this digital age, Innovation is a significant way to success. The route to innovation in
business means doing things differently, smartly, or in a better way that will make positive
differences as far as quality, value or productivity is concerned and all this is done by using
proved or emerging technologies in the world. IT or Information Technology has proved itself
already in the last two decades. It brought dramatic changes in lives of organisations and
individuals. Online shopping, social networking, digital marketing, cloud computing, digital
communications are some of the best examples currently, which together brought the wave of
IT. We know that effective marketing, proper business planning, global sales, real time
monitoring, managing systematically, long-term growth of business and instant customer
support can never be achieved at optimum levels without the incorporation of IT.
1 Introduction:
Every business’ success depends on certain number of factors such as meticulous analysis,
future vision and choosing right type of technology. Research has proved that organizations
that invest in technology and choose their route to innovation, result in increasing their market
share, competitiveness and financial figures. IT gives us the opportunity to analyse particular
data and also helps in planning our business journey appropriately. Information Technology
provides us with many tools which can help solving complex problems and in turn plan future
growth of our business. While sitting in our remote offices, we can promote our products with
help of digital marketing. Thanks to modern communication and cloud computing, they enable
us to form organizations globally, monitor and manage all of its virtual offices located in
various parts of the world. Let us explain what the role of IT is in different business phases.

If Decision Making is considered, accuracy and speed in decision making are important
aspects in our business. All Organizations pass through a process of market research, which
helps the management in making right decisions. It can be done in many ways by using forums,
online surveys, group discussions using WWW (World Wide Web), blogs, individual
interviews etc. Certain tools such as Big data, Microsoft CRM, Google Analytics are also used
heavily nowadays in order to extract desired information which impacts decision making.
These tools provide real time responses from target audience and ensure data accuracy.
When we talk of Business growth and marketing, centroid of business success lies here. First,
we identify our target audience and then we observe the needs and trends of audience. Digital
marketing is something which lets us promote our products/services all over the world. It
includes many concepts such as blogging, SMS, MMS, Mobile marketing, PPC (Pay per click)
etc. Presently, web market is booming at high rate because entrepreneurs know that long-
term success in today’s business is impossible without being digital present on the web.

The key to success is high customer satisfaction and it cannot be achieved without a customer
support. So, we need to know the needs of the customer, the trends, the behaviours and
satisfaction levels. Internet has enabled businesses to communicate with existing/potential
customers and deliver value in real time. Citing some of the channels provided by IT such as
webinar, email, social media, newsletters etc. CRM systems are used normally by enterprise
organisations which helps in holding data. This in turn helps in understanding the future needs
and behaviours of the customer.

Resource management also plays an important role in success of business. As far as

large/medium organization is concerned, it becomes very difficult for the top management to
manage resources manually. Again, IT plays an important role here. Multinational companies
such as Google, Amazon, Microsoft, McDonald, use cloud-based solutions for managing
physical/virtual office and staff all over the world.
2 Literature Review:
Ahmad, S. (2014) wrote an article on Technology in Organizations which tries to understand
the implications of technology in organizations, the paper talks about history of technology in
organizations, talks about how the technology is impacting business in the world, it also
stresses the importance of adapting new technologies in organization how the organization’s
should use technology to further their strategic objectives and using technology to achieve
competencies. The barriers that organizations face while implanting technologies and how they
should use the financial and human resources effectively in mitigating the barriers. The
organizations should communicate effectively with its stakeholders to successfully navigate
through the technological changes.

Berisha-Shaqiri, A. (2015) wrote an article that specifically talks about how information
technology and internet has impacted business. The internet as a resource has grown by leaps
by bounds in this present world and e-business has developed due to the evolution of
information technology. The author studied the use of information technology in the SME’s of
Kosova. He found that there is an increase of computer usage across the SME’s in all activities
from with more than 50% companies using it for financial record keeping. The technology are
also impacting the developing economic structure and SME’s follow global trends in the use
of technology for the enhancing productivity. It concludes that internet is a strategic resource
that has to be used effectively in maintaining efficiencies and achieving competencies.

Hussain, T., Iqbal, Y. (2013) have specifically discussed the information technology in the
context of electronic media. They have found that the electronic media is growing to be a major
part in the media industry and has talked about the ways information technology has disrupted
the journalism and media industry and also how the journalists do their job. It mentions that
efficiency of journalists has increased as they can put in their remarks directly through to the
editors. The information technology has helped the sector in sending the information at a fast
pace with a remarkable efficiency, minimized the errors and inconsistency. It also affected the
industry in using of more graphic and animated images for sharing of information.

Lindh, C. (2010) in this author studies the relation between information technology and
business relationships He has conducted research and has collected 354 business relationships
in Swedish business to business market. The research tried to answer the question of the how
the need for personal meetings is influenced by usage of information technology. The research
showed that more than 60% of people do not see a change in their personal meetings due to
usage of information technology. The author observed through his research that when use of
information technology is higher the change in the use of personal meetings is higher

3 Role of IT/IS Present and Future

3.1 Finance
Information Technology has rapidly transformed the business landscape by transmitting
information across people quickly and widely, by streamlining various processes and create
communities which were earlier deemed possible. IT has enabled the replacement of
decentralised physical systems with centralized financial systems capable of generating real
time reports and provide financial metrics. Further IT has created new opportunities in the
financial sector. Blockchain is an emerging technology and is a digital, distributed transaction
ledger with identical copies maintained in the network. Thus, blockchain has the potential to
speed up and simplify cross border payments through cryptocurrencies like Bitcoin and
Ethereum.

The modern businesses have established the technology for wire payments portal and
established security protocols to ensure security through cryptographic techniques and
blockchain will further augment the technology with its immutable public distributed ledger
system. The role of IT has been effective in improving customer experience and reducing
company costs through online banking services providing a multitude of options including
money transfer, account balance, recharges, etc and enabling remote, secure, wireless
transactions.

ATMs have also augmented the customer experience thus help banks maintain a wide portfolio
of customers eliminating costs. Also, the role of IT in insurance sector is rapidly progressing
by enabling a platform for sale and distribution of their insurance plans and enabled the
diversification of the products offerings and exploration of new domains. Also, the customers
are provided with a distinct claim ID for claims tracking, online enrolment, financial reporting,
and billing and electronic fund transfer. Also, EMI calculation and many other features are
automated using IT. Further IT has enabled the profiling of retail and institutional customers
for credit and uses neural networks to predict risk in providing credit to the customers on the
basis of their previous transactions and identifying patterns and anomalies there within.
Further, the role of IT has become paramount in stock trading with the national and private
bodies having established their electronic trading platform. The investment companies also
currently use genetic algorithms to decide which combination of projects a firm should invest
in to maximise their returns. IT has created a new generation of investors who invest in stock
markets through the mobile trading application.
3.2 Accounting
The role of IT in accounting is paramount and is visible in the way the companies made a
transition from physical accounting and financial systems to paperless online application-based
systems. One of the prime advantages is the replacement of silos-based accounting systems
based on department and location to a centralized accounting system that is capable of collating
and aggregating data across departments and locations and provide reporting services. Thus,
Information Technology has enabled to place the information at the palms of the accountants,
improve the capacity of accounting research and extension specialists to organise, store,
retrieve accounting information and exchange and evolve and establish the mechanism of
information sharing. Software have helped the accountants in their daily tasks, such as paying
bills, recording transactions and reporting. There are several applications in the market
including Tally ERP and SAP ERP which have established themselves for providing enterprise
solutions to the accounting and financial systems of the business.
Further, the use of IT systems has enabled the establishment of strong security protocols which
were previously not possible in the physical paper-based systems. Also, online systems has
enabled significant cost saving, fast real-time report generation and decision making and is in
synchrony with the initiatives of various institutions to ensure sustainability and energy
savings.

3.3 Supply Chain Management

A well-managed supply chain establishes the development of strong links between the
suppliers, manufacturers, distributers and customers which has been enabled by the enterprise
IT solutions which allows optimum productivity, overall satisfaction at lower costs.
Information technology helps the companies to strategize their operations and compete on the
basis of either low cost or ensuring quality. A quick and effective management information
system enables the managers to maintain optimum inventory levels thus reducing the holding
costs and not to miss the opportunity cost of lost sales. With the introduction of RFID tagging,
the managers are able to track the goods as they are processed through the supply chain
enabling better planning and reducing the additional costs. This improves the billing process
and reduces shrink and improves the on-shelf availability.

Thus, IT acts as a cog in the wheel of establishing Just in time procurement systems and helps
improve productivity and reduce costs. Also, the transaction with the suppliers and customers
are recorded in the database and made available to the various managers which help them
profile the suppliers and hence select them on the basis of various parameters like cost, quality,
etc. Also, RFID tagging and IT enabled mobile application allow the information to be updated
in real time even at the retail outlets enabling optimized stocking and restocking at the retail
outlets. Thus, IT enables the replacement of menial jobs with technology and hence provides
reduced costs. Another aspect is the maintenance of centralised data warehouse connected to a
cube enabling analysis and generation of predictive models for demand also accommodating
various factors like seasonality, trends and other macroeconomic factors, etc.

Thus, finally IT enables the integration of SCM, ERP and CRM into e comprehensive
enterprise management information system which helps address the various multifaceted needs
of the client.
3.4 Sales and Marketing:
Role of IT at present:

Customers are an important part of any business and to develop a long-term growth strategy,
focus must be shifted towards relations with customers. Technology is playing an important
role in integrating customer relationship management with the organisational activities to
achieve better results. The marketing campaigns can now reach wider set of people than it was
ever possible to reach without the use of technology. It is now easier to generate huge amount
of relevant data to study the consumer profiles. Thus, it has made it easier to build up potential
customer profiles through analysis of available data. This increases the conversion rate of the
marketing campaigns into successful orders by customers. With the help of technology
advertisements can be more focussed towards the target customers for example a TV ad which
costs a lot can be optimized by putting on region specific location and not other places there
by driving down costs. Similarly, technology helps to understand the behaviour of the
customers for example the type of blogs they share, the type of websites they visit, the type of
posts they like so as to create user specific advertisement. Also, technology has enabled
managers to create greater brand equity by opening up various new channels to explore and
gain consumer loyalty.

Role of IT in Future:

The role of IT in future is predicted to be enormous. Marketing will become more tactical than
it was before due to the possibility of deep collection, analysis and interpretation of data.

Facial recognition: The advanced technology may help to create a scenario wherein customers
can be tracked to create more engagement with them by mounting or implanting chips or
devices in their devices or even inside their bodies. With the help of facial recognition
prospective customers can be identified when their presence may be there in the vicinity.
Again, the data will be curated easily by tracking the customers spending history, buying
patterns etc.

Precognitive Marketing: Specific requirements of the businesses can be identified and for these
processes focussed programs for marketing can be devised. These focussed programs can
address to the business problems effectively to resolve the issues in the process. These
technologies would create solutions for problems that customers have not even faced now but
are going to face in future. These interactions between customers and suppliers can be held at
global level
3.5 Customer Relationship Management:
Role of IT at present:

CRM with the help of technology connects the organisation as a whole to its customers. This
connection is made through a web based interface which is user friendly for the personnel
involved in the transaction and the agents. It enables to manage huge data bases which is
required and is essential for analysis. Technology is unavoidable from the start to end. To begin
with computer programs are used to collect data from customers by sales agents via an online
browser. The analysts can study this data after accessing through the internet and provide the
information and knowledge to the managers. Since, the internet penetration has been rising
with the complementing rise of mobile smart phones, many companies are considering the use
of mobile application software for use in field by the sales agents or executives.

Applications, touch points with customers, and storage of data are three parts in CRM that are
majorly driven by technology and are the main points where human interaction happens.
Technology has helped CRM to rise above physical contact and is enabling CRM managers to
establish relations remotely.

Role of IT in future:

Technology will augment the CRM processes to become more flexible in their operations and
be accessible to various types of business both large and small. Speech recognition technology
will be used in CRM for data entry purposes. Since a major proportion errors caused in the data
analysis of CRM is caused due to manual entry caused while entering data, voice recognition
will remove this problem and make the analyses more reliable and dependable.

VOIP technology helps firms to make telephonic calls from the internet itself thereby reducing
the mobile expenses to zero. Thus, VOIP will help to get leads in the CRM process easily as
compared to telephonic interview. Secondly, it will quality of the interaction between
executives and customers thus will foster better relationship with customers.
3.6 HR functions

Role of IT at present:

IT has enabled many functions of HR to be faster and more accurate. HR managers, with the
help of technology can collect more data about the employees to track their performance and
also attitude towards work. Talent requisition is now easier through the networking sites like
Linked in, Facebook etc., where companies offer the available positions and can shortlist
prospective candidates based on their CV itself. The cost of interviewing these people by
meeting them personally is evaded. Many HR policies are now rolled out owing to certain
behaviour of employees. This can help companies to attract talent by giving them exactly the
things they like in return for their work.

It is also easier to track which part or which employees needs improvement, thus, proper
direction can be given to such part.

Role of IT in future:

Artificial Intelligence has penetrated into all business functions and is expected to penetrate
more in near future. It is expected to change the employee experience as companies will be
equipping their resource acquisition team with auto bots. These bots can assess the candidates
on many parameters like attitude, aptitude, etc., and help the firms to select worthy deserving
candidates without any bias.

Cloud solutions will also be available for HR functions that will take away the burden of huge
space requirement for storing all relevant data. Continuous performance management system
is expected to be drive out the inefficiency and increase the productivity among employees.

Thus, Technology will transform HR functions

4 Discussion

In the context of a business enterprise or a commercial establishment, the arrival of information

system technology has made the earlier indispensable factors of production like capital and
labor substitutable without any barriers. With the gradual mechanization of the production
processes globally, the requirement of labor and capital for a specific output or process has
come down.

In what way the above is brought about can be understood from the following theories and
instances.

Transaction Cost Theory:

As per this theory, the expansion in the volume of

an organization is due to their ability to obtain
certain products and services at a more economical
price from internal sources that by sourcing it from
external firms. Information systems reduce market
participation costs, and makes external sources
more attractive for attaining products and services.
This is how information systems help firms increase
revenue while reducing their size.
Fig : THE TRANSACTION COST THEORY OF

In the contemporary frame of things, firms expanded THE IMPACT OF INFORMATION

in size in order to reduce transaction costs. TECHNOLOGY ON THE ORGANIZATION

Information systems lower costs for a given dimension by the inward shift of the transaction
cost curve and the unlocking of potentialities of increase in revenue even without increase in
size or even the combination of revenue growth and decreasing size.
Agency Cost Theory:

In case of this theory the firm is viewed as an

infinite web of contracts concerning self-motivated
individuals, who require careful inspection and
monitoring in order to ensure that the organizations
interests are met.

Information systems assist in reducing agency

costs, the costs of gathering people from the various
Fig : THE AGENCY COST THEORY OF THE
walks of life and activities that help all managers
IMPACT OF INFORMATION TECHNOLOGY
observe workers in large numbers.
ON THE ORGANIZATION

Flattening Of Organograms by Information Systems:

Information systems help reduce the number of levels in any enterprise by providing managers
with adequate amount of information to monitor huge numbers of employees and also by giving
greater autonomy to lower level employees as far as decision making is concerned.

Fig : FLATTENING ORGANIZATIONS

Information Systems in the Post Industrial Organisation Theories:

In accordance with post-industrial organization theories, information systems lead to

compressed hierarchies by

- Encouraging self-managed professionals

- Decentralizing decision making
- Encouraging the formation of temporary ‘task forces’ that address specific tasks

Fig : ORGANIZATIONAL RESISTANCE AND THE

MUTUALLY ADJUSTING RELATIONSHIP BETWEEN

TECHNOLOGY AND THE ORGANIZATION

Information Systems Help in Gaining Competitive Advantage:

Firms hold a competitive advantage over others when they either have access to special
resources which other firms don’t or when they are able to use the available resources more
efficiently than their competitors which helps them achieve greater levels of productivity and
efficiency. These feats finally lead to better stock market valuations for the concerned firm
over its competitors.

Fig : PORTER’S FIVE FORCES MODEL AND ITS IMPACT ON GAINING COMPETITIVE ADVANTAGE
Organizational Resistance to Change

As IS holds the access to key information, hence there is a chance of it getting entangled in
organizational politics.

Organization structure, politics, culture, work change greatly when there is introduction of IS
and these changes garner a lot of resistance when they occur. The above mentioned political
and organizational barriers are the major reason for the failure of large projects.

Features of a Successful Information System (In the Business Environment):

For information system to be a success in the context of the field of business, it should have
the following features:

- IS is made an integral part of the management function which unambiguous objectives

to make sure that IS focuses on major business issues. Development resources are
supplied in large quantities and human barriers are done away with.
- IS’s open system is kept under perpetual surveillance so that it acts as per the situations
needs.
- IS recognizes the manager as a human being and considers human behavioral aspects
while facilitating management decisions.
- IS helps develop the information system for the efficient management of critical success
factors. It serves the requirements of the senior management and hence focuses on
critical applications for the mission.
- Selected IS should be well suited to the data processing and analytical needs of the user.
- IS system’s operational viability should be ensured.
- IS concentrates on results and emphasizes the factors and reasons for failures.
- The IS system in function should be user friendly and easy to operate.
- IS is not allowed to settle into an information generating mill avoiding the nuisance in
the information and the communication system.
- IS realizes that information needs are constantly changing, and old information
becomes not needed and hence it must be able to adapt promptly to new demands.
- IS should be able to recognize that varying information needs for different goals. Global
expansion of information in isolation from the decided goals results in information
overload and redundancy.
Understanding the Design Implications of Information Systems in the Field of Business:

a. To generate relevant efficiency and profits, Information systems should be built with a
clear understanding of the structure, environment, leadership, culture, business
processes and the principal affected interest groups of the organization in question.
b. Planning new information systems should take into account the following
organizational factors:

- Environment where the organization will function.

- Structure including hierarchy, group dynamics, routine, business process.
- Prevalent style of leadership and type of organization.
- Impact on and attitude of end users, interest groups.
- Nature of the tasks, decisions and business processes that the information system is
designed to facilitate.

5 Conclusions

With the coming of new age technology, businesses are becoming tech savvy to remain in
competition. Earlier IT which was limited only to a few sectors such as websites and other
customer interfaces is spreading to each and every section of business functions, be it
Finance, HR or sales and marketing. It is making the world a small place and businesses to
work efficiently breaking all geographical barriers. Those businesses that make use of the
emerging technologies at an early phase gain competitive advantage and survive in the
market while others who aren’t able to cope up or adapt to the new technologies face a risk
of getting out of market. IT is no longer a supporting function but the very crux for running
the business in a dynamic and ever changing environment. Having said that, all of this IT
advances are also coming with the risk of data protection, privacy and ethical issues which
the businesses need to be aware of. Precautions and measures need to be taken by the
business entities to make sure IT remains to be a boon and not turn into a curse or disaster
too difficult to handle. Then only, the role of IT will come to its true sense which we will
all appreciate and be a part of.
References

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