Advantages Of Information Technology Information Technology Essay

Information technology (IT) can be defined in various ways, but is broadly considered to encompass the use of computers and telecommunications equipment to store, retrieve, transmit and manipulate data. The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones.

In 3000 BC, the Sumerians in Mesopotamia were the first to develop the writing. This was the first tryst of human beings with storing, manipulating and communicating information. In purview of today’s meaning of Information technology, it appeared in the modern sense in 1958in an article that was published by Harvard Business Review.

The Information technology has been growing and developing from four basic phases. They are: pre mechanical, mechanical, electro mechanical and electronic. In simple jargon, information technology can be stated as management of computer based information systems.

Even in the pre historic era, when man thought exchanging a stone for wheat made complete sense, they used to keep count of things using sticks and stone. Man was always pressed for information and used various means to understand, identify, store and revive this information. For many a thousand years, various devices have been used to aid computation. From the earliest tally sticks to today’s tablets, information technology has grown. The earliest known mechanical analog computer- Antikythera mechanism was also the earliest known geared mechanism. There was no turning back to information technology and it has grown manifold from databases, data storage, data retrieval, data transmission and data manipulation.

The worldwide spending in information technology has grown to a staggering 3,628 billion U.S dollars. Every company- partnership, joint venture, every type of industry- agriculture, retail and just anybody from a start up to a multinational makes use of information technology to connect, communicate and collaborate.

Technology before made use of punched tapes that were long and striped and were represented by a series of holes. Today with wireless solutions and cloud computing coming in, such technology is obsolete. During the second world war, electronic data storage was used in modern computers. Then A Williams tube based on standard cathode ray tube, but the information had to be continuously refreshed due to presence of volatile memory and tended to be lost once power was gone. This is a far cry from today’s scenario where even if you forget to take a backup a device can retrieve your unsaved texts as most digital data is stored magnetically on hard disk drives and the capacity worldwide to store information ha only being doubling .

Thus, information technology today is beyond computers or electronic tools. It is the way of life. It is all about communicating in real time and making sense of the data to fulfill purposes for larger good of the society. It has become an indispensable part of one’s lifestyle. A person who is not technology savvy is a rarity in today’s fast paced globalized era. The one thing that is driving the information technology to take leaps and bounds is: communication.

The future of Information Technology

Change is the only constant – is the best way to sum up the future of information technology. The pace at which information technology is changing can knock down the very pillars of it. It is constantly evolving and refining. Stronger security processes, new operating systems and virtual real time communication has been the call of the day.

Communication has never been easier. Information technology is penetrating even rural areas and people are becoming technologically savvy throughout. The future of operations in any business lies in information technology. Communication has been facilitated on a real time basis and the future is all about the virtual world.

What will drive information technology will be the sophisticated demands of the users. Where people once approved of using the good old paper to store information, they are opting for virtual server space. Letters and posts are a thing of the past with emails, messenger systems taking over. There is existence and dominance of new technologies such as SSD’s and high speeds and unified networking.

Collaborative development will be highly dominant in the future with customers and companies teaming up to create more specialized and personalized solutions. Level of access to IT resources will determine the withstanding and competence of the companies. If user needs will not be fulfilled then they will simply go out and get their own information systems in place.

Social networking will be one of the key drivers of information technology. Social media will be used for professional, personal means, for advertising, networking and beyond. Agility and flexibility will be the main focus and the processes, technologies, software’s will acknowledge this shift. However, this can also pose as a threat and challenge as with such fast paced changes, it will be taxing to keep up with user expectations. Many a times technology will become obsolete even without ts full potential being realized.

Also, information technology will see less of loyalty towards a particular operator or system because simplification, standardization, modularity and integration will be the primary needs and organizations will not mind being flexible to change operation and information systems based on their demands.

Collaboration and data flexibility will be the highlights as a scalable and dynamic infrastructure will breakthrough traditional enterprise architecture. Cloud computing is the future of information technology which has been stated time and again and is making major breakthroughs. Cloud infrastructures will make it possible to offer secure extranets that organizations will be able to leverage securely and also facilitate more specialized services which will act as catalyst for efficiency.

Security will also be one issue as everyone will opt for stronger security and data privacy and opt for information communication systems that are commensurate with their specific security requisites. All in all information technology will lead the day.

Advantages of Information Technology

As stated earlier, information technology primarily deals with computer applications. Today’s work environment irrespective of type of business model, kind of work, scale of work etc is highly dependent on information technology.

Information technology is utmost significant for any organization to sustain and survive in today’s fast pace globalized world. All the work, parking tickets, ordering of meals is completely automated. IT professionals are now working overtime to make sensitive data rare to get. The advancement of IT has led to –

Administration of systems throughout

Culture development and real time communication

Streamlining of business processes and upgradation in a timely manner

Manipulation, protection and retrieval of sensitive information

The benefits that information technology has brought has been manifold and in various areas. Few of the innumerable benefits can be stated as follows-

Globalization-

True globalization and its full potential is only being realized through information systems. The automated systems have been able to make geographical boundaries fade and pave way into making the world a truly global village. Linguistic barriers have no longer been a problem. Communication has become cheaper and time constraints have also been overcome.

Cost-effective-

Internet business processes have made many businesses more productive and increased their client list at cheaper rates. Clutter free working conditions and a global client list have been made possible due to information technology. Internet has by far been the biggest USP of information technologies.

Communication-

Quick, efficient and real time communication is what rules the roost today. It is vital for any kind of business, organization, formal and informal relationships in the world. Information technology makes it easier to connect faster and facilitates communicating when and where required. Like minded individuals can be identified, having a global team is facilitated and strengthening of ties takes place.

Storing and protecting information-

Low cost business options to store and maintain information is every organizations point of view to have information systems in place. Virtual vaults, security systems make up the plus points as well as the challenges of information technology. Hacking of technical data, viruses can be overcome by information technologies.

Lastly, information technology creates job opportunities.

Disadvantages of information technology

Implementation Expenses

Every business must consider startup costs when implementing any type of information technology system. In addition to the cost of hardware and software, some technology vendors require businesses to purchase user licenses for each employee that will be operating the system. Businesses must examine the cost of training employees in unfamiliar technology. Although basic information technology systems may be user friendly, advanced programs still require formal instruction by an expert consultant. In addition to the startup expenses, information technology systems are expensive to maintain. Systems malfunction, and when they do, businesses must engage skilled technicians to troubleshoot and make the necessary repairs. These expenses present a major disadvantage of information technology in business, particularly to businesses that are entering the technology era for the first time.

Job Elimination

Implementing information technology into business operations can save a great deal of time during the completion of daily tasks. Paperwork is processed immediately, and financial transactions are automatically calculated. Although businesses may view this expediency as a boon, there are untoward effects to such levels of automation. As technology improves, tasks that were formerly performed by human employees are now carried out by computer systems. For example, automated telephone answering systems have replaced live receptionists in many organizations. This leads to the elimination of jobs and, in some cases, alienation of clients. Unemployed specialists and once-loyal employees may have difficulty securing future employment.

Security Breaches

The ability to store information in an electronic database facilitates quicker, more efficient communication. In the past, an individual would sift through stacks of paper records to retrieve data. With properly implemented technology, information can be recovered at the touch of a button. Although information technology systems allow business to be conducted at a faster pace, they are not without their flaws. Information technology systems are vulnerable to security breaches, particularly when they are accessible via the Internet. If appropriate measures are not in place, unauthorized individuals may access confidential data. Information may be altered, permanently destroyed or used for unsavory purposes.

Management information systems

A management information system (MIS) provides information that is needed to manage organizations efficiently and effectively. Management information systems are not only computer systems - these systems encompass three primary components: technology, people (individuals, groups, or organizations), and data/information for decision making. Management information systems are distinct from other information systems in that they are designed to be used to analyze and facilitate strategic and operational activities in the organization. Academically, the term is commonly used to refer to the study of how individuals, groups, and organizations evaluate, design, implement, manage, and utilize systems to generate information to improve efficiency and effectiveness of decision making, including systems termed decision support systems, expert systems, and executive information systems. Most business schools (or colleges of business administration within universities) have an MIS department, alongside departments of accounting, finance, management, marketing, and sometimes others, and grant degrees (at undergrad, masters, and PhD levels) in MIS.

The management information system gives the most significant information that is essential for decision making to take place. Early computers had only one track direction and simple operations such as sales, billing, tracking inventory etc. As time has passed computer applications has become very complex and technologies are being constantly refined and improved. A major concern has been to grow hardware storage capacities and technologies has been improving. Previously isolated applications are also given their due consideration with teh aid of management information systems.

Management information systems come into play for long range business plans. Reports based upon performance analysis is utmost significant for the business plans to be executed. Management information systems also aid in providing various feedback loops that help in providing sense of direction to an organizations business plans. Real time performance of cost centres, detailed accounts and management of the projects becomes much easier by having management information systems in place.

Following benefits can be attained by using information systems-

Strengths and weaknesses of a company are highlighted by having revenue reports, date of company’s performance, records of employees performance etc in place.

Identification of various aspects that can help improve an organizations business processes and operations

It is a key communication and planning tool which gives a 360 degree picture of the organization.

Clarity about marketing and promotion activities required as effective and efficient management of customer data can be made possible

Aligning of business processes with the needs of the customers

Consumers buying behaviour, purchasing trends and patterns can be understood by MIS.

Sustainability

Sustainability in simple jargon can be defined as the capacity of one to maintain, endure, undertake and support anything. Sustainability has various dimensions and is not limited to a product, human or organization. Everything and anything that supports, ensures is sustainable.

An organization should have a going concern attitude i.e. people may come and go but the organization continues to stay. Such an ideology can only be practiced when an organization is sustainable and does not perish to its challenges. Sustaining an organization is very daunting as it takes time, planning and cultivation. Systems need to be instutionalized and a long term approach has to be brought in even to manage trivial day to day operations. Every task of the company has to be interlinked and symbolic in order to attain sustainable advantage over time.

In order to attain sustainability, there are seven factors that are necessary for ant organization to possess. They can be explained as follows-

Organizational identity- The vision and mission of a company make its organizational identity and justify the reason for it to sustain. Branding and strong leadership can be attributed to organizational identity. The core reason for a company to exist, grow and sustain are defined here.

Long range strategic planning- Perpetual existence of a company can only be made probably by planning with a long term vision. The goals and objectives of an organization should be flexible and adaptive in order to endure the challenges that will come. Benchmarking with companies that have sustained ups and downs and still stand strong is ideal for long range strategic planning.

Financial and other system administration- Money is the life blood of any organization. Its workings require finances and the end goal of every business is to earn enough profits to sustain itself. Cash flow analysis, budgets give clear view of where the company stands and what should be done to sustain the organization and make it grow.

Long range fund raising plan- Cost leadership, focus and differentiation which leads to sustainable competitive advantage require long range fund raising plans. Capital goods can be created only by having future financials in place. Needs and resources have to be created and cultured with a view to sustain and no perish.

Annual operational plan- Management of an organization is what leads to sustaining it eternally. In today’s dynamic settings objectives, activities and timeline lead to operational efficiency. Dedicated resources, staffing with competent employees and having the best practices in place are a necessity for organization sustainability.

Board Development plan- Authority and power are essential to ensure an organization endures complexities and adapts to changes. So organization sustainability requires evaluation of needs and assessment of requisites and working towards fulfilling them.

Organization culture and staff development- The culture of an organization is the crux of sustaining any organization as people may come n go but the culture remains and defines the withstanding of a company.

Competitiveness

The ability and performance of any organization implies its competitiveness. For eg- the ability of a firm to supply goods and services in a particular market in relation to other firms in the same market defines its competitiveness.

Competitiveness throws light on the attractiveness towards something. An investor would find it attractive to invest in something based on its competency and competitive viability. Competition occurs in all walks of life and with different magnitudes and intensities.

The trend emerging at the moment is global competitiveness. With globalization setting it firms and organizations have been thrown on a competitive platform that is global in nature and this has lead to increasing in efficiency and bringing in the best practices. Inclination to compete is also increasing in companies. Price wars, blue ocean strategy, cutting edge innovation, interactive marketing campaigns are few strategies that organizations are opting for to get competitive advantage.

Rare resources, operational efficiency, trademarks are few ways by which companies reinforce their competitive edge as market leaders or challengers.

Porter’s five forces is used extensively to understand competitive environment around an organization. Industry analysis and business strategy development can be done by usage of porters five forces model. Attractiveness and competitiveness of any particular industry can be analyzed with the aid of porters five forces.

It sheds light on five key aspects that make or break magnitude of competition. They are – Bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitutes and existing competitive rivalry within an industry. Recently, a new force termed as threats of complementary goods has also been identified.

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Productivity of processes and employees

Productivity can be defined as measure of efficiency of production. It is measured as ratio of production output to the requisite that needs to be produced i.e. the input.

Production processes lead to economic well-being and aim directly for satisfaction of human needs, wants and desires. The earliest reasons for man becoming productive are to be able to fulfill his requisites.

Commodities, goods, services, systems, processes are all produced to satisfy some need. Production functions need to interact with each other in order to lead to satisfaction.

Productivity of processes and employees will lead to sustaining a firm and also define its competitiveness.

Productivity of an organization lies in enhancing its processes and empowering its workers. Processes should be streamlined and automated and also valueless processes should be eliminated and lead times and manpower efficiency should be made shorter.

Productivity of employees can be stimulated by delegating work, developing ideas of improvement, supervision and brainstorming as well as other tactics.

LITERATURE REVIEV

Article 1: Impact of information technology on public accounting firm productivity

Author: Rajiv D. Banker, Hsihui Chang (The University of Texas at Dallas )

Yi-ching Kao (University of Wisconsin-Milwaukee)

Journal of Information Systems, Vol. 16, No. 2, Fall 2002

Summary

The research article spoke about the impact of IT implementation on the production function of an international public accounting firm. It helps in implementing new software and groupware for knowledge sharing in 1998. It provides insight about the potential impact on work efficiency at individual user, business processes and work group level.

IT incorporated significant improvement in productivity providing support for the value of audit automation and knowledge sharing in public accounting firms. It also facilitates the decision making process of audit professionals and the databases provided critical support for audit decisions.

It also provides insights about unmeasured organizational and cultural factors that contributes to the organizations productivity. In addition, the information explains the underlying changes in the organization and broadens the traditional quantitative approach to understand why and how productivity can be improved.

Article 2: Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns

Author: Fardad Zand, Cees van Beers and George van Leeuwen

Summary

This article exhibits that IT improves productivity as large as eight times that of ordinary capital. Firms in the services sector of the economy enjoy higher marginal products of IT than their manufacturing counterparts.

Secondly it contributes to labour productivity improvement. IT also incorporates structural change. The study reveals the effect of IT in form of gaining sustainability. It tells us about the dual role of IT. IT helps in creating applications that are more productive in different industrial context. Seemingly, technology driven process changes do not lead to significant effects unless the also create fundamental changes in both internal as well as external structural elements of a firm.

Article 3: White-Collar productivity and the effect of information technology: Can it be measured?

Author: Dr. Lance Revenaugh, Dr. Andrew S. Philippakis

Summary:

The article tells about the infusion of IT in an organization generates changes in the kind of work being performed and leads management to want to be able to gauge the before and after impact of IT infusion.

As a result of IT and other changes in restructured organizations, supervisory office staffs are playing increasing roles via enhanced work definitions. The article provides a framework for statistically measure the impact evaluation.

Article 4: The impact of information technology on quality improvement, productivity and profits: An analytical model of a monopolist

Author: Matt E. Thatcher, Jim R. Oliver

Summary

This article tells that firms usually make investments in IT to gain cost reduction and quality improvement.

Cost reduction: Mainly in food, chemicals, transportation equipment and traditional production are primarily devoted to cost reduction. Data processing functions are primarily contributing to cost reduction. As a result technologies are often associated with a fall in the equilibrium price for a product or service.

Quality improvement: In this model a single product monopolist may undertake. Investment in each technology improves product quality and firm’s productivity varies on type of technology implemented. Mainly in profit maximization firms IT inclusion leads to product quality improvements to capture higher profits, but sometimes at the expense of firm productivity.

Article 5: Information technology and labour productivity growth: an empirical analysis for Canada and United States

Author: Surendra Gera, Wulong Gu and Frank C. Lee

Canadian Journal of Economics, Vol 32, No. 2

Summary

The article is focus upon the relationship between labour productivity and IT. IT investments are an important source of labour productivity growth across Canadian industries.

IT investment is much more important at the margin than non IT investment in determining labour productivity growth. Mainly because of increased diffusion and use of IT, communications and information processing cost have gone down drastically. It provides and insight about the empirical model that is been used to measure labour productivity. The labour productivity growth and R&D spillovers are also clearly described in the article.

Article 6: The Effects of Development in Information Technologies on the Productivity of Business Enterprises

Author: Kadir YILDIRIM, Levent SAHIN

Yonetim Bilimleri Desgisi(5:2) 2007 Journal of Administrative Sciences

Summary

Information and information technologies are the main items of the new economic order and in that order, firms have to increase their productivities for standing in the competitive sector. IT incorporates radical redesigning of the organizational structure to gain competitiveness.

It provides the insights about the importance of IT while reconstruction of organizations. IT incorporates importance of information technology based innovation and innovations are highly important to gain competitiveness. Moreover, it increases productivity.

In this globalization economy, for the firms to exist and continue profiting, there has to be continuous growth in the competitiveness. As a result of that firms do invest in IT. But at the same time highly educated and experienced manpower and efficient administration should be applied.

Article 7: Information technology and productivity: It ain’t what you do It’s the way that you do I.T.

Author: John Van Reenen, Raffaella Sadun (Centre for Economic Performance, London school of Economics)

Summary

The article tells us about the rapid growth of major economic development over last decade. It is stated that the sectors that used IT experienced productivity acceleration. Moreover the bulk of the evidence from firm level, micro-economic studies is that IT does have an economically and statistically significant impact on productivity but varies dramatically between firms.

US firms are better placed to take advantage of ICT. It is likely that European firms will have to adopt more US style business processes to obtain the same level of productivity advances. Basically this is a matter of time but the question is how long will it take?

Article 8: The impact of ICT on Productivity: The moderating role of worker quality and quality strategy

Author: Ana Gargallo-Castel and Carmen Galve-Gorriz (University of Zaragoza, Spain)

Summary:

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The main learning from this article is about gaining a better comprehension on how information and communication technologies affect firm productivity, and of the other complementary factors.

The main contribution lies in the possibility of offering evidence supporting the existence of a statistically significant relationship, not only between ICT and productivity, but also between the multiplicative variables that represent ICT and other complementary factors.

The differences in the use and impact of ICT across firms are probably due to the lack of complementary resources or the lack of fit between key organizational aspects. Factors related to the social, technological or legal environment may also play an important role in ensuring that the potential gains in productivity from the successful use of ICT are among the primary policy targets.

ABOUT THE PROJECT

Objective:

The objective of my study is to understand the effectiveness of Information Technology on organization’s productivity.

Research Problems:

After implementation of Information technology in an organization the following factors are evaluated

Effectiveness of the software

Effectiveness of the employees

Effectiveness of the management

Hypothesis:

Problem 1: Effectiveness of the software

H0: The role of software is not significant in improving the overall effectiveness

H1: The role of software is significant in improving the overall effectiveness

Problem 2: Effectiveness of employees

H0: The role of IT is not significant in effectiveness of employees in retail sector

H1: The role of IT is significant in effectiveness of employees in retail sector

Problem 3: Effectiveness of the management

H0: IT does not play significant role in effectiveness of the management

H1: IT plays significant role in effectiveness of the management

As any research requires data for the analysis, the data considered in this project falls under two categories which are:

Primary Data: - The data will be collected using questionnaire.

Secondary Data: - These data are generally the data which support the primary data and hold an important position in the analysis of the research. The secondary data includes information from the internet.