Impact of ICT on business performance

Graduate Business School

Master of Science in Data Analytics

Name of student: MC NAMARA CHIWAYE

Student number: 20140511Q

Name of lecturer: Professor Charles Makanyeza

Assignment: Academic Writing

Due date: 10 February 2019

Question: Referring to Zimbabwean organisations, discuss the impact of ICT on

business performance.[100 marks]
 Impact of ICT on business performance

Contents
Introduction........................................................................................................................ 2
Impact of ICT on Mobile Technology................................................................................3

Impact of ICT on Inventory Management...........................................................................4

Impact of ICT on Banking Sector......................................................................................4

Impact of ICT on Infrastructure.........................................................................................6

Impact of ICT on System Upgrades...................................................................................6

Impact of ICT on Digital Strategy......................................................................................7

Impact of Technology on Employment...............................................................................9

Summary........................................................................................................................... 9
 Impact of ICT on business performance

Introduction

“In 1998, OECD member countries agreed to define the ICT sector as a combination of
manufacturing and services industries that capture, transmit and display data and
information electronically. This definition based on an international standard
classification of activities (ISIC Rev. 3), was considered a first step towards obtaining
some initial measurements of ICT sector core indicators. The principles underlying the
definition are the following: For manufacturing industries, the products of a candidate
industry: • must be intended to fulfil the function of information processing and
communication including transmission and display. • Must use electronic processing to
detect, measure and/or record physical phenomena or control a physical process. For
services industries, the products of a candidate industry: • must be intended to enable the
function of information processing and communication by electronic
means.”(Organisation for Economic Co-operation and Development, 2002).

The expansion in ICT services has been dominant in data and voice services with notable
growth experienced by the internet mobile networks (Africa Development Bank [AFDB],
2019). Zimbabwe ranked 136 out of 176 countries ICT Development Index (IDI)
according to (International Telecommunication Union [ITU], 2017). AFDB( 2019) also
found out that Zimbabwe currently has an e-government development index of 0.3696,
and ranks 146 out of 193 countries.

The government plays a central role in the growth of business and the adoption of ICT
products and services. The government can impact on the use of technology through
various interventions, such as, regulation, liberalisation, subsidies to firms, tax regimes,
educational policies that impinge on the skilfulness of employees, and the enforcement of
standards (Tsokota, 2013). ICT products and/or services generally cover all types of
technology (data, voice, video, etc.) and associated resources, which relate to the capture,
storage, retrieval, transfer, communication or dissemination of information with
electronic media. All resources required for the implementation of ICT are encompassed,
namely equipment, software, facilities and services, including telecommunications
products and services that carry voice and/or data.
 Impact of ICT on business performance

Impact of ICT on Mobile Technology

Information technology is bringing fundamental changes to many Zimbabwe businesses.

These changes are occurring as business people learn how to use the new technology to
improve efficiency and expand the services they provide. The incremental impact of
mobile technologies on business highlights the importance of communication with
customers and suppliers. According to a study by (Perekwa et al., 2016) mobile money
agents, mobile dealers and mobile application developers recorded significant figures
among these indirect mobile players. (Perekwa et al., 2016) found out that largely, the
MSEs agreed that the use of mobile technology result in increased revenues, market
disintermediation, increased productivity, increased communication and relations with
suppliers and customers. Sixty-two percent of MSEs reported that use of mobile
technology results in the creation of new products and services for the enterprise and 57
percent agreed that mobile technology results in service and product differentiation
(Perekwa et al., 2016). EcoCash agent and merchants are the major players in mobile
business and we have seen that a lot of jobs have been created across the country
particularly around business centres.

Impact of ICT on Inventory Management

The study revealed that the companies’ adoption of ICT inventory management improved
the inventory. The ERP software managed to improve transaction processes and
supported information sharing among different system users but some improvements
were required to achieve an efficient and effective inventory management system for the
whole companies.(Zengwa & Choga, 2016) recommended that Automatic alert systems
should be installed within the SAP programme to manage inventory shelf lives and
provide automatic updates on inventory levels. SAP has developed Robotic Process
Automation to create alert. Robotic process automation accelerates the digital
transformation of business processes by automatically replicating tedious actions that
have no benefit. In Zimbabwe, this area is still new and most companies are using legacy
system.
 Impact of ICT on business performance

Impact of ICT on Banking Sector

The aggregate monthly value of digital payment transactions increased by an average of

18% to during the first five months of 2019, whilst the corresponding volumes
exponentially increased by a monthly average of 23% (RBZ, 2019). Many studies
conducted to evaluate the importance of using ICT in some important sectors of the
economy, for instance the banking sector have shown that ICT is a key strategic resource
for all the banks. Use cases for technology include the facilitation of relationships
between banks and their customers using social media, mobile banking, loans, creating
bank account, accounts registration. Bank in Zimbabwe are embracing Technology as
they seek to remain relevant and competitive. CBZ were among the first banks to go
digital by eliminating paperwork. Since the adoption of digital banking, there has been
significant growth in the uptake of mobile money service by all the mobile service
providers for transferring, receiving and paying of services. The ICT products that made a
huge impact are Bank to wallet, Swipe to EcoCash, ZIPIT and rtgs.

Technology has affected the way we apply for loan. For example, KaShagi offered by
Steward Bank is an instant short-term loan. The loan application and disbursement
process takes place in under 60 seconds by simply dialing *236#. Customers who have an
EcoCash wallet or a Steward Bank account may access these loans. A customer may
apply for a KaShagi Personal Loan up to a maximum of USD100. This shift show a fast
paced shift of business if we are to compare to the findings of (Tsokota, 2013) that
Banking institutions which have not been providing customers with debit and credit cards
and internet banking facilities are surprisingly in the forefront to offer mobile banking
services. However, mobile money transfer are not being used for international business
and in making online payments (Tsokota, 2013).

The Government of Zimbabwe is encouraged to support banks and building societies by

providing appropriate infrastructure that support e-banking. Banks and buildings should
educate their customers so that they can adopt e-banking [ CITATION Mak15 \l
7177 ].Failure to adopt the digital way of business leads to loss of market. For example,
NMB created a system for ZINARA tollgate. NMB POS is faster than Steward bank,
CABS NEDBANK and CBZ. NMB is now the preferred choice at tollgates. Prior,
Steward Bank and CABS mainly dominated the tollgate market share. Customer
expectation is high. Customers want easy, less friction and fast deals. Digital expansion is
 Impact of ICT on business performance

a key focus, which could drive competition in the banking sector to new levels. In order
to achieve the full benefit from technology and to be relevant in enabling greater
efficiencies and respond to the evolving customer demands Zimbabwe business should
continue to digitalize its ICT delivery channels and electronic banking (E-
channels).Banks need continuous improvement to give the customer more control of their
finances. A customer-centric culture in innovations leads to the development of user
friendly and convenient technologies. Digital transformation through investment in ICT
capabilities is key.

The emergence of mobile banking services such as EcoCash, OneWallet and TeleCash on
the scene has also created alternative platforms where people transact and save their
money. This only served to bolster long-held views that banks critical in financial
intermediation are still stuck in the proverbial brick and mortar model of business where
literally everything is done under the roof with the help of a teller. While a few banks
have realised the need to change their business models, most financial institutions have
failed to respond to market needs swiftly, timely and adequately.

Impact of ICT on Infrastructure

Whilst there has been significant roll out of communications infrastructure with 2G
exceeding 75% population coverage (as at 31 December 2014), high speed broadband
coverage is still patchy with most rural and remote areas remaining uncovered due to a
non- holistic approach to universal service (Ministry of Information Communication
Technology, 2015). These challenges affect the growth of business outside the major
cities of Zimbabwe. At present, some government websites are either not available or are
still running on obsolete templates/designs and have outdated information, thereby
making conducting business difficult. Zimbabwe (“Zimbabwe Infrastructure Report,”
2019).

Impact of ICT on System Upgrades

A new invention quickly become obsolete in just a matter of two (2) to three (3) years
because of fast development and increase in the knowledge. Many banks and Fintech
companies are constantly upgrading their software to patch the old one. A case in point is
Ecocash, which recently upgraded their software. This development disrupted the normal
 Impact of ICT on business performance

banking operation for 3 days. About four (4) years ago, finnacle 7 was taken to be a
robust software capable of supporting any large database. After the upgrade, users could
not buy airtime, had their accounts blocked and lost money whilst trying to transact.
[ CITATION Tec19 \l 7177 ] reported that, the aftermath of all that is extremely lengthy
queues at Econet shops in the CBD as EcoCash tries to clear the errors which keep arising
due to the current instability of the system which leads to a vicious cycle and queues this
long:. The EcoCash platform is estimated to have over 10 million registered customers,
and about 180 000 merchants and agents. Ecocash processed 99,4 percent of the total
value of mobile money transactions, whereas TeleCash and OneMoney processed 0,1
percent and 0,5 percent respectively[CITATION Her19 \l 7177 ].

EcoCash, one of Econet’s biggest business units, moves billions of transactions annually
through its over 50 000 agents dotted throughout the country. A survey carried out by this
paper shows that EcoCash agents are charging a premium of up to 55 percent to
customers in need of cash that is mainly in coins[ CITATION Tec19 \l 7177 ].

Impact of ICT on Digital Strategy

Understanding the scope of digital business strategy helps to conceive its relationship to
firms, industries, IT infrastructures, the external environment, and how digital business
strategy can be more effective in a variety of settings (Enfermagem, 2013). The results
indicate that munificent industries and higher ICT spending are interrelated facts,
showing that in sectors with more growth opportunities firms invest more in ICT and this
leads to higher industry concentration, greater profit dispersion and higher competitive
turbulence in the sector. Also, the paper shows that SMEs can rarely take advantage of
their ICT-based innovation to start high-growth phenomena[ CITATION Pao19 \l 7177 ].
Our findings demonstrated that the effects of ICT projects are not limited to social and
economic development, but are also categorized as strategic, managerial, informational,
operational, transactional, organizational, infrastructure, and transformational
development[CITATION Far20 \l 7177 ]. Ideas regarding digital business strategy are
still in the early stages of development. Many firms continue to treat different facets of
digital shifts within traditional domains, such as marketing, operations, information
systems, and Internet technologies [CITATION Far20 \p 54-88 \l 7177 ].
 Impact of ICT on business performance

Businesses that have embraced the innovation paradigm tend to have the following
characteristics: They have business that is more accurate planning. They have marketing
that is more effective. They have higher global sales. They have management that is more
systematic. They use real time monitoring. They offer instant customer support. In fact,
it’s hard to think of long term business growth without the push of information
technology

There are divergent views on the impact of Information, Communication and Technology
(ICT) in the banking sector as we have seen in our earlier discussions. Some of my
colleagues agreed with me that ICT have influenced greatly the banking sector, while
others disagree because ICT have created some distortions by replacing human capital
with machine capita. Some believe that the advantages far outweigh the disadvantage
.Much as it has put many people out of job, at the same time it has contributed
significantly to creation of jobs (Bosamia, 2018).

However, the impact of information and communications technology have not been
without its challenges. So many people have lost their jobs because of the replacement of
some tasks and services by machines and computer systems. The unemployment situation
have worsened such that, the percentage of unemployed youths have risen to worrisome
level. Some banks have reduced the number of their branches because of improvement in
technology. Banks like CBZ, Standard Bank, NMB, First Capital bank and CABS have
some branches with greater part of their operations carried out by machines and computer
system. As at today, some banks are still behind others in competition because of
associated cost of deploying some of the machines, computer systems and other electronic
channels. The structure of banking halls are now different from what we used to know
before. The computer systems, machines and other tools are strategically deployed to
ensure that customer expectations is achieved with less friction. Many changes are still
very much on their way and the impact will continue.

Summarising the discussion above, one can see that ICT have totally revolutionized the
banking industry or sector and thereby changing the manner business is conducted
nowadays. In addition, the situation will continue many years to come. The effect or
impact have the positive side of it as well as the negative side as we can deduced from the
 Impact of ICT on business performance

discussion. Whichever school of thought you belong, it is obvious that there is a cause
and effect situation.

Impact of Technology on Employment

With the exception of a few services, the citizens and businesses in Zimbabwe have to
obtain services in the traditional way: waiting in queues to obtain multiple documents
from different sources – to satisfy the requirements of a specific transaction – and then
repeating the process repeatedly. Of course, automation has been affecting occupations
for a long time without apparently generating sustained unemployment (Tsokota, 2013).
Economists sometimes explain this paradox by arguing that other sectors compensate for
the job losses, for example, manufacturing grew to compensate for the loss of jobs in
agriculture. Based on this analysis they project that nearly half of all jobs are susceptible
to complete automation in the near future. However, none of these 37 occupations has
been completely automated. Banks that have retrenched many worker due to automation
are CABS, CBZ and Standard Bank and Steward bank. In the case of Steward bank, they
retrenched people but in less than 6 month, the bank started to hire again. If history is a
guide, computers may eventually tend to reduce the number of jobs as more marginal
computer applications are exploited that do not produce as much job growth.

ICTs are enablers for economic growth because of their crosscutting nature thus affecting
all sectors. Businesses that have embraced the innovation paradigm tend to have the
following characteristics: They have business that is more accurate planning. They have
marketing that is more effective. They have higher sales. They have management that is
more systematic. They use real time monitoring. They offer instant customer support. In
fact, it is hard to think of long-term business growth without the push of information
technology.

Summary

ICT has affected all sectors of the economy in what has been termed as the digitalisation
of everything. Banks and mobile companies are on the forefront of ICT investments and
innovations. ICT has affected business differently. Those companies that invested in ICT
have become more profitable. Most banks we have a digital strategy in place in order to
remain competitive. Businesses in smaller towns and rural areas face challenges of the
 Impact of ICT on business performance

lack of infrastructure. There are many software but the challenge is on how to integrate
those software so that business can cut process cycle times. RPA, block chain, and
machine learning and Artificial intelligence will continue to transform the workplace and
low level tasks will be automated leaving human to focus on task that have high value.
(Calo, 2017). There is need for skilled workforce and investment in human capital on the
side on companies. Lifetime learning is one way of ensuring that the workforce in
Zimbabwe remains very productive and efficient.

Changes brought about by ICT has been very fast. In order to win in the next era
company need to retool. In conclusion, the impact of Information and Communications
Technology in banking sector is enormous and has global impact. The effect is in not only
the banking sector but also actually all sectors of the economy. In the banking sector, the
speed of revolution in bank processes via ICT is such that people are wondering whether
robots will not take over the banking operations soonest. New invention quickly become
obsolete because faster and more efficient methods come in. To achieve success in this
digital era companies need to have a digital strategy that aligns with their overall goals.
 Impact of ICT on business performance

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