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CSC208/Information Technology for Business

How information technology may affect the bottom line of an organization a critical analysis

Before discussing on the above subject matter let us first look at the definition of information technology. According James A Senn, information technology in business,
Information technology refers to a wide variety of items and abilities used in the creation, storage and dispersal of data and information as well as in the creation of knowledge. Data are raw facts, figures and details; information refers to an organized, meaningful and useful interpretation of data, while knowledge is the awareness and understanding of a set of information and how that information can be put to the best use. It has three main components namely computers, communications, networks and know-how.

Although information technology is essential, organization cultures and business strategies shape the use of IT in organizations, more often the influence is stronger the other way round. IT significantly affects strategic options and creates opportunities and issues that managers need to address in many aspects of their business.

Although IT has been in existence for quiet a long period of time, it only came to the light at the late 1950s. This development took place in the United States of America, according to James A Senn, IT in business at a time when the people working in offices out numbered those doing the manual jobs. As people became more dependants on the IT in other to carry out their various works, IT was transformed and it became more flexible in other to cater for the diverse needs of its users. Today IT has taken a vast portion of our daily lives not only in the business sector but in almost every human endeavor. Below is a graphic representation of the United States work force which includes Agriculture, Industry, Services and Information. In the 1990s, people working on

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CSC208/Information Technology for Business

the information side have out numbered those working in other sectors such as agriculture and industry. As technology continue to progress, more people will be employed to fill up the needed quarter in such industries.

60 50 %of workers in 30 sectors 20 10 0 1875 1920 1960 1994 40 Inform ation S ervices Industry Ag riculture

Source: United States Department of Labor

Information Technology and organisation

Now we are back to the question how IT may influence the bottom line of an organization now that we are familiar with the IT concept, it is only fair to say IT is an aid in solving problems, unlocking creativity and making people more effective then they would have been without the activities of IT. To improve their operational efficiency and to maintain their competitiveness in the market place many organisations continue to invest substantially in their Information Technology capability. The impact of information technology will have significant effects on the structure, management and functioning of most organisations. It demands new patterns of work organisation and affects individual jobs, the formation and structure of groups, the nature of supervision and managerial roles. Information technology results in changes to lines of command and authority,

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and influences the need for reconstructing the organisation and attention to job design. Computer based information and decision support systems influence choices in design of production or service activities, hierarchal structures and organisations of support staff. Information technology may influence the centralisation/ decentralisation of decision making and control systems. New technology has typically resulted in a flatter organisational pyramid with fewer levels of management required. In the case of new office technology it allows the potential for staff at clerical/operator level to carry out a wider range of functions and to check their own work. The result is a change in the traditional supervisory function and a demand for fewer supervisors. One example, secretaries with the impact of Information technology are moving increasingly into territory previously occupied by managers and administrations, and achieving new levels of responsibility. The importance of effective management of technical change has been highlighted by recent and continuing developments in IT. Although the term IT originated in the computer industry, it extends beyond computing to include telecommunications and office equipment. Advances in technical knowledge, the search for improved economic efficiency and government support for IT have all prompted a growing movement towards more automated procedures of work. The impact of IT demands new patterns of work in organisations, especially in relation to achieve procedures; one example is the shift in the traditional role of the secretary more towards that of the manager and administrator. IT affects the nature of individual jobs and the formation and structure of work groups. There is a movement away from large scale, centralized organisation to smaller working units. Processes of communication are increasingly limited to computer systems with the rapid transmission of information and immediate access to their national or international offices. Improvements in telecommunications mean for example that support staff need no longer be located within the main production unit. Changes wrought by IT means that individuals may work more on their own, from their personal work stations or even from their own homes, or work more with machines than with other people. One person may be capable of carrying out a wider range of activities. There are changes in the nature of supervision and the traditional hierarchal structure of jobs and responsibilities. Computer based information and decision support systems provide additional dimensions of structural design. They affect choices such as division of work, individual tasks and responsibility. The introduction of IT undoubtedly transforms significantly the nature of work and employment conditions for staffs.

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CSC208/Information Technology for Business

We are living in a global economy that is increasingly dependant on the creation, management and distribution of information resources. So information is a basic resource in todays society. People in many nations no longer live in agricultural societies, composed primarily of farmers, or even industrial societies where a majority of the work force consists of factory workers. Instead, the workforce in many nations consists primarily of workers in services occupations or knowledge workers, that is people who of their working day using and distributing information. IT has become a vital component of successful business firms and other organizations. Thus IT constitutes an essential field of study in business administration and management.

Transformation of work
The information age is closely linked by the transformation of earlier tools and work processes so that they lead to more productivity and effectiveness. New tools are combined with earlier tools and activities in ways that raise their productivity and effectiveness.
In an article written by Jacks Nilles, Centre for Future Research, he explains that: IT creates new

opportunities for innovation in products and services. Services which used to be delivered in person can now be delivered over networks. And he sides the following among the key levers that
influence the success of an organization in respect to IT.

Re-sequencing: including parallel processing of data-bases Simultaneity: making information instantly available in several systems 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)

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IT initiative Individual Work group Laptop system Product data base

Process changed Sales call

Business benefit Increased sales customer

Production distribution Greater satisfaction

Business unit

Production management system


channel Improved competitive position


Source: Adapted and reprinted by permission of Harvard Business School Press from Process Innovation: Reengineering Work through Information Technology by Thomas H. Davenport. Boston: 1993, P.47. Copyright 1993 by Ernst & Young.

The figure above shows how information technology was used to transform several business processes at an agricultural chemical industry. Notice that business processes at the individual, work group and business unit level can be changed by using information technologies to provide economic benefits and thus minimize profit.

Rethinking business practices

IT provides the capability to rethink conventional business practices. When businesses introduced IT into their firms, they typically sought to use computer processing to automate routine tasks that workers had been performing manually. The ways of conducting business did not really change, they just speeded up, so that more business were a mess as a result of disorganization or faulty procedures, automation accomplished nothing more than speeding up the mess. Properly used information technology does more than simply speed up routine activities. It allows companies to rethink conventional ways of doing business. It provides the opportunity to reengineer what is being done in a company or entire industry. IT is dramatically changing the nature of professional work. There are few offices where professional do not make use of personal

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computers, and in many jobs involving extensive information and knowledge based work, the use of the computer is often a core activity. Becoming effective not only requires traditional skills of organizing, thinking, writing etc., but knowing how best to use the power of IT for researching sources, accessing information, connecting to experts, communicating ideas and results, and packaging the knowledge (asset) for reuse. One aspect of this is the need for hybrid managers people who are competent at both their discipline and IT. The way in which IT diminishes the effect of distance means that it creates a variety of options for reorganizing the workplace. At a basic level, it can provide more flexibility in the office, allowing desk sharing and a degree of location independence within a building and wireless PCs become more firmly established. At another level it permits the dispersion of work teams, thus saving costs of relocation and travel. It has also created the mobile professional and also allows people to work effectively from home

Influence of Information Technology on the success of an organization

In the industrial age one has to know how to use and maintain his machines. In the information age, the most successful people are those who know how to make the most of IT. That involves more than just knowing how to key data into a computer or how to print reports. Success requires knowing what IT can do to improve your personal performance (quality, speed and efficiency) and how it can enhance your businesss products and services in ways that add to their value and for customers. Lets take a retail store as an example to illustrate this point. As a consumer you have to deal regularly with the information systems that support business operations at the many retail stores where you shop. For example, most retail stores now use computer-based information systems to help them record customer purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales trends. Store operations would grind to halt without the support of such information systems. Information system also helps stores managers make better decisions and attempt to gain a strategic competitive advantage. For instance, store managers might make a

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decision to install computerized touch-screen catalog ordering systems in all of their stores, tied in with computer-based telephone ordering systems and a home computer shopping network. This might lure customers away from other stores, based on the ease of ordering merchandise provided by such computer based information systems. Thus, strategic information systems can help provide strategic products and services that give a business organization a competitive advantage over its competitors.

Information technology is rapidly shaping the business landscape, although organization cultures shapes the use of IT in organizations, IT undoubtedly transforms significantly the nature
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of work and employment conditions for staffs and it greatly contributes in the production, distribution and enhancement of products and services in business. Although it is agreed that the introduction of IT has largely cut the size of workers in numerous firms, it has also paved way for new jobs in other business sectors. Given the pace at which the world is changing day-by-day into a global village, there is no doubt that information technology will continue to develop and be transformed so as to meet up the demand of the ever-changing world.


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James A. Senn, 1995. Information technology in Business. 2nd Edition. New Jersey USA: Prentice-Hall. Henry C. Lucas, 1990. Information System Concepts for Management. 4th Edition. San Francisco New York: McGrew-hill. Calrles P. and Thomas C., 1993. Management Information Systems. 2nd Edition. San Francisco, New York: McGrew-hill.

Internet Jacks Nilles, Centre for Future Research,

Business Administration, School of Business, the University of South Carolina Columbia SC 29208 US. The Kenan-Flagler Business School, University of North Carolina Chapel Hill, NC 27599 USA Received 27 February 1997; revised 8 July 1997.


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Creating the Collaborative Enterprise, Karl Erik Sveiby, Berrett Koehler (1997). The New Organizational Wealth: Managing and Measuring Intangible Assets, Jan Duffy, ARMA (1999) - a practical approach for implementing knowledge management. Harvesting Experience: Reaping the Benefits of Knowledge,

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