You are on page 1of 51

Impact of IT management

on business.

Lecture 3
The Six Important Business Objectives
of Information Technology

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.
Information Technology
in 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.
Information Technology
in 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
Information Technology
in 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 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.
Information Technology and Cost
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.
Cost Savings and 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 touch-screen 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.
Information Technology
in Globalization

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.
Five IT Functions in an Organization

It can be argued that the little computing devices people carry

around have somewhat become part of us. They have become like
additional organs in our bodies, like arms or legs. Perhaps we can
think of them as some kind of enhancement on our brain, allowing
us to achieve things we previously never imagined possible.
In the same way, IT has become an additional organ in the body
of any business, allowing the business to achieve much greater
things than it otherwise could without the help of IT.
Five IT Functions in an Organization

The IT department is an important department, complementing

and supplementing the others in numerous ways. And yet, if you
aren’t very well versed with technology, it can all seem a little
vague when you try to think of just how the IT department helps
the rest of the organization. For sure, you know that this
department is absolutely important. What you’re not sure about is
just what makes it so important.

There are many functions of ICT. However, five functions stand

out as particularly crucial.
The Function of Communication

Communication has always been an important aspect of business,

even long before information technology came along. However,
with the rise of computers and the internet, communication has
been redefined. As a result, communication is one of the most
important IT roles in the organization. It has now become
possible to contact anyone no matter what part of the world they
are in. When it comes to business, this capability is quite useful.

The IT department allows the organization to achieve

communication at very high speeds through multiple channels:
IT channels of communication
• Email: You can easily send your employees an email when you need to
communicate something without having to see them in person. Email is also a
great channel for sending official communication to clients and leaves a clean
‘virtual’ paper trail which allows you to keep a steady record of correspondence.
• Video Conferencing: Video conferencing is a great way to communicate with a
faraway team and being able to see them at the same time. It’s easier to have
remote meetings and even collaborate on a project together. With video
conferencing, you might as well be in the same room.
• Collaboration Software: Collaboration software allows teams to work together on
projects in a manner that is both efficient and fast. With the right collaboration
software, you can cut project times by up to half and do away with needless
meetings since everything can be done in a virtual meeting room.
• Social Media: Social media not only allows your employees to keep up to date
with the latest industry information but also presents a fun way to wind down and
The Function of Data Management

This is another one of the IT department functions that make it

indispensable. With the increasing complexity of the world of
business comes an increasing amount of data that businesses
have to deal with. This data also comes in multiple dimensions. A
business will see traffic in many different kinds of data, including
text data, audio data, and video data, among others.

In order to control this data, a business will need an IT department

to run something called a database. The database will allow the
business to do three things:
The Function of Data Management

• Store Data: By putting the data in a storable format, a database allows you
to store vast amounts of data in a small space. Long gone are the days when
data had to be stored on paper and other bulky mediums. In an age where
information is power, it helps to be able to hold a lot of it conveniently.
• Manage Data: Data isn’t very useful in its original form, known as raw data.
It needs to be sorted into a meaningful form that can be meaningfully
deciphered and used to make decisions in the business. The IT department
provides the tools with which this data can be managed, including analyzing
it and drawing conclusions from it.
• Access Data: No matter what kind of data your business needs to store,
that data is valuable and needs to be controlled so that only the right
people can have access to it. The IT department provides the security
measures that will safeguard that data and prevent unauthorized access to
The Function of Marketing

Marketing has been a core aspect of business for as long

as businesses have been around. With the rise of
computers and the internet, marketing campaigns are
becoming increasingly digital. The IT department can help
with the marketing functions of a business in numerous
The Function of Marketing
• Content Creation: You can create advertising and sales copy on a computer using
word processing software. You can also create beautiful graphical ads using
powerful computers with graphics capabilities.
• Online Advertising: Social media is becoming increasingly important to advertising
and, since it lives on the internet, what better department to help you with your
efforts than the IT department? By launching social media marketing campaigns,
the IT department can improve sales and increase revenue. It can also launch
marketing campaigns for the business on other platforms, such as Google
• E-commerce: With more and more businesses going online, the use of computers
has become invaluable to how you conduct your business and sell your products
and services. The IT department would be instrumental in the processing of orders
made on your online store.
• Marketing Research: With the rise of search engines, it is now possible to conduct
research online about consumer trends and the most profitable opportunities. The
IT department can also be instrumental in this
The Function of Process Improvement

It can prove to be quite important in the improvement of processes and

efficiency in order to save the company money. A small business could
save on printing and copying costs by relying purely on paperless
communication. Collaboration software and video conferencing would
save on logistics expenses which would have been incurred every time
different teams needed to meet and work together. It would also save
on time as not much time would be wasted on transit.
The Human Resources department can become more efficient because
of the IT department since training sessions can be done online and
communication with employees can be done without the need for
paper. The result is massive savings on both time and cost.
The Function of Enterprise Resource
Enterprise resource planning is all about linking the different
functions of an organization, such as accounting, human
resources, manufacturing, and sales, using software systems.
These systems can help in operations as well as strategic decision
making. For a small business, the reduced complexity means these
systems can be installed one module at a time and can be scaled,
as the need arises.
What Are the Advantages of
Information Technology in Business?
With the advent of the internet and management information
systems (think computers, phones and software), businesses have
been able to transform from local mom and pop shops to
international household names. In order to keep up with
competition as a result of internet commercialization, companies
are increasingly turning to information technology, or hardware,
software and telecommunications networks, to streamline
services and boost performance. As such, IT has become an
essential feature in the business landscape.
Tip, IT Streamlines Communication

TIP: IT can help companies cut costs, improve communication,

build recognition and release more innovative and attractive

IT Streamlines Communication: Efficient communication is critical

to company success. In an increasingly connected and dispersed
business landscape, recruiting, retaining, and leveraging
employees requires ongoing communication and collaboration. A
key advantage of information technology lies in its ability to
streamline communication both internally and externally.
IT Streamlines Communication
For example, online meeting and video conferencing platforms
such as Skype, Zoom and GoToMeeting provide businesses the
opportunity to collaborate virtually in real-time, significantly
reducing costs associated with bringing clients on-site or
communicating with staff who work remotely. In addition, IT
allows organizations to connect almost effortlessly with
international suppliers and consumers.
IT Facilitates Strategic Thinking

One of the fundamental advantages of IT is its ability to enhance a

company's competitive advantage in the marketplace, by facilitating
strategic thinking and knowledge transfer. Accessing and leveraging
social networks and subscription databases, for instance, has enabled
companies the ability to assemble, interpret and transfer information
like never before. This has given businesses unparalleled access to
customers and consumers, enabling organizations to deliver new and
enhanced products.

Therefore, when used as a strategic investment rather than as a means

to an end, IT provides organizations with the tools they need to
properly evaluate the market and to implement strategies needed for a
competitive edge.
IT Stores and Safeguards Valuable
The storage, preservation, and maintenance of information,
known as information management, is another domain in which IT
shines. Information management is essential to any business that
must store and safeguard sensitive information (such as financial
data) for long periods of time. IT affords companies the ability to
store, share, and backup files for later use, as well as protecting
information from unauthorized individuals. As a result, IT gives
businesses the peace of mind that the information they collect
and analyze can be properly stored and safeguarded for future
IT Cuts Costs and Eliminates Waste

Although IT may seem expensive when first implemented, in the

long run, however, it becomes incredibly cost-effective by
streamlining a company's operational and managerial processes.
The implementation of online training programs is a classic
example of IT improving an organization's internal processes by
reducing costs and employee time spent outside of work. In effect,
IT enables companies to do more with less, without sacrificing
quality or value.
IT in communication
• Communication is not only about speaking to and hearing from
people, it’s about understanding the complete message.
• Given the organisational and geographical diversity of project
teams – it is important to consider all methods of
communication. Today’s enhanced technology allows us to
communicate easily where ever the team members may be. A
communication strategy should be conceived at the project
planning stages, so key is its influence on the success of the
Communication methods can either be active or passive.
IT in communication
ACTIVE communication methods PASSIVE communication methods
• Face to Face meetings • Pod cast
• Video conference, meeting – one • Web cast
on one, or group
• Email
• Telephone conference, or voice
only web conference • Intranet bulletin boards
• Webinars, becoming increasingly • Blogs
popular for the delivery of • Website
presentation based activities
• Telephone – good old fashioned • Project newsletter – paper based
call • Table top presentation
• Stand up presentations in person
Conclussion: Advantages & Disadvantages of
Information & Communication Technology

• With electronic devices so tightly wound into the fabric of

modern society, the advantages and disadvantages of ICT use
may not be immediately apparent.

• What are they?

New Communication Methods

• ICT has opened up a wide range of new communication methods,

allowing you to contact others more or less instantaneously, and for
less money and over greater distances than ever before. Technologies
such as texting, instant messaging and video conferencing allow users
to communicate in real time with people across the world for a
nominal fee, a concept which may have seemed ludicrous before the
advent of computers. In addition, text-based computer
communication can give those with speech or social problems a level
playing field to communicate with their peers.
• The ease of these communication methods comes with a downside,
as anyone who has had to review a thousand new email messages
before morning coffee is well aware. Some ICT components, such as
intelligent chat bots, are finding service to help respond automatically
to at least some forms of incoming communications.
Body Language and Non-Verbal Cues

• Communication through voice chat or instant messaging does

not take body language into account. Non-verbal cues are a vital
part of the way humans communicate, with researcher Albert
Mehrabian calculating that 55 percent of the message pertaining
to feelings and attitudes portrayed by people is in facial
expression alone. As such, there is an increased chance that your
message will be misunderstood if you are not engaged in face-
to-face dialog with the person you are talking to.
Security Issues and Risks

• ICT provides a range of ways for fraudsters to gain access to your

personal details, which could result in you or your business
losing money and reputation. Technologies such as online
banking mean that with the right security information a third
party could impersonate you and gain access to your finances
remotely. This is in stark contrast to the pre-ICT era, when frauds
would have needed to convince another person (for example, a
bank teller or phone operator) that they were you in order to
access your money.
Creation of New Industries

• As well as providing a boost to existing industries such as

manufacturing and shipping, heavy adoption of ICT has spawned new
industries all of its own. Programmers, systems analysts and Web
designers all owe their jobs to ICT, as do the people involved in
secondary industries such as technology training and recruitment.
• However, the increased efficiency and automation brought about by
ICT can also cause job losses, especially in manual roles and the
manufacturing sector. New forms of communication also put old
business models at risk. Newspapers and print magazines are
pressured by online news sources. Peer-to-peer communications have
made possible businesses like Uber and Airbnb that are disrupting
traditional services like taxis and hotels.
Advantage: Speed and Efficiency

• Being able to reach customers, co-workers and vendors quickly

helps improve the efficiency of any business operation. Mobile
technology makes it easy to get or to keep contact information in
a mobile device. You can reach out with questions or updates
from anywhere. For example, a manager in the field trying to
determine why an order hasn't arrived can quickly contact his
office, supplier and delivery courier within a few minutes from
the offsite location.
Disadvantage: Lack of Relationship
• Technology has reduced the amount of face-to-face interaction
or the number of actual telephone conversations that people
have. It is much easier to send a quick text rather than to engage
in a phone call. Although this efficiency is certainly a benefit,
there is value to the chit-chat that's now becoming lost.
Relationships are built when a business knows its customer and
discovers opportunities to serve them more effectively through
personal interactions.
Advantage: Communication Log

• Technology has made it easy to keep extended communication

logs. Emails and texts are easily tracked to confirm what was
discussed in previous correspondence. Even phone
conversations can be recorded and logged in digital formats
through customer retention management software. Whether to
quickly review what was discussed or to keep a legal record of
correspondence, technology has made logging communications
much easier.
Disadvantage: Informal Communication

• Traditional written correspondence such as letters via postal mail is usually

more professional in format and tone, while email and texting can show a
lower standard of professionalism. This can become a problem if clients feel
that the informal nature is a reflection of actual capability. Professionalism
suggests whether a company is capable of doing the job it was hired for.
Informal communications may tarnish a company's reputation.
• For example, if an employee addresses a customer in an email, "Hey Linda,"
this simple informal salutation may be perceived as too casual or perhaps
even unprofessional by some. If the body of the email uses slang or
improper grammar, the reader might delete the email before finishing it.
It's important to know your clients or customers on a fairly casual basis
before you jump right in with a first-name salutation, and to always keep
your level of business communications professional.
Advantage: Mobile Workers

• Technology has transformed the workforce into a mobile

workforce. This means that people can work from home or from
anywhere in the world, and can collaborate with team members
via cell phones, internet resources or video conferencing. This
creates employees who are more productive and happier, and
who have greater flexibility in work hours and their location.
Mobile workers can access all relevant forms, information and
company materials in exactly in the same way as in-office
More negatives
• An Omnipresent Distraction: Cell phones and mobile devices allow
users to stay connected even when away from their
computers. Technology can also be a distraction at home or in the
office, as always-present instant messaging applications and social
networks can draw a user's attention away from more important
• Dehumanization and Depersonalization: When the Internet reduces a
person to a faceless screen name, it can make it hard for some users
to remember that an actual person exists behind the avatar, which
can encourage hostility and exclusionary behavior. Young people are
especially prone to online hostility, with 43 percent of kids reporting
that they've suffered online bullying -- 25 percent of them on more
than one occasion.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Your technology – everything in your office from physical devices
to information networks – has an incredibly transformative
influence on your business world and economy. Not only does
your technology impact the smallest details of day-to-day
business operations by increasing the productivity of workers
and investments, accelerating economic activity, promoting
interdependence between industries, and allowing for the
continual deployment of new technologies, it has also changed
consumer preferences and reshaped the way businesses
produce and market their goods. But not all of these changes
have positive effects.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Competition – technology moves very quickly in a constant
evolution that creates new technology in an office devices and
faster systems. Businesses must take note of these changes and
attempt to keep up with technology, adapting it to their present
and future needs while also watching what their competitors are
utilizing. While the end result is an increase in the evolution of
technology and its application to business, it can be very costly
for a small business to try to keep up with the latest and greatest
hardware or software out there.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Confusion – while keeping up with the technology available can be
advantageous, implementing new hardware or software can mean
that you must not only retrain your employees, but sometimes you
must also retrain your customers. This can result in lost productivity
and revenue if your upgrade does not go smoothly
• Crime – technology has also added an increased possibility of crime.
A tech-savvy employee can embezzle funds and make it difficult for
the company to trace; hackers could access personal or financial data
of customers; or creators of viruses and malware can capture valuable
information that could render a company helpless. It has become
imperative that businesses also spend time and money developing
safeguards against these events.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Productivity – new technology has driven down the cost of data
processing, and increased the ease with which large volumes of
data can be manipulated by and transferred between various
units within an organization. Additionally, this increased
processing power, along with the broad range of off-the-shelf
and customized hardware and software that are available, have
resulted in changing employer and client expectations of work
quality and throughput both at the employee and organizational
10 Positive and Negative Technology Changes
that Affect Business Operations
• Collaboration – current technology has opened the realm of
possibilities for businesses to allow their employees to work
outside the office through teleworking arrangements or off-site
work assignments. Cloud computing options have made it so
that work can be done anywhere at any time and clients can
access their information at their leisure as well.
• Access – businesses used to be limited to their local area and to
the clients who could physically get to them. Utilizing the
internet and e-retail sites, businesses can now extend their reach
all over the globe.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Dependence – once a business has implemented a technology
solution and integrates it into its daily operations, that business
cannot remove the technology without running into serious
difficulties. This dependence can have dire consequences for the
business should the technology fail and businesses could find it very
difficult to continue its daily activities without its vital technology.
• Compliance – regulations come into play when technology crosses
into the realm of important social issues. For example, the Healthcare
Insurance Portability and Accountability Act (HIPPAA) imposes strict
security requirements on any healthcare organizations with digitized
patient files. Similarly, the Sarbanes-Oxley Act requires digital
reporting and security measures within publicly traded
companies. Such regulations can impose sudden, and often very
costly, expenses on the technological aspects of a business.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Lost Productivity and Liabilities – instant access = instant risk.
The same internet that connects you to clients across the globe
can also stream videos. Email systems that increase the speed at
which you communicate with your clients also gives employees
the ability to get into an online flame war with a former co-
worker or client. This introduces a new level of responsibility on
the part of employers to limit and control these activities and
such controls can often cost additional money. Additionally,
these controls are not always optional.
10 Positive and Negative Technology Changes
that Affect Business Operations
• Interaction and Participation – in addition to the providing
organizations with another platform for marketing and
promotion, and to disseminate information, social media offers
consumers and the public a large, a voice. Many organizations
are beginning to capitalize on the opportunities to secure
feedback on their products and services, and even to use the
collaborative environment that technology now fosters for
crowdsourcing initiatives, such as crowdcreation, crowdvoting
and even crowdwisdom.
• (Information
Technology’s Impact on the Organization)
• (Advantages
and Disadvantages of eBusiness You Need to Understand)

• (TEDx Talks

The new digital business)

• (Ethical
Issues on Information Technology and Intellectual Property)