Role of information technology in business

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Information Technology, as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware." IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and securely retrieve information.

Today, the term information has ballooned to encompass many aspects of computing and technology, and the term has become very recognizable. IT professionals perform a variety of duties that range from installing applications to designing complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as the management and administration of entire systems.

When computer and communications technologies are combined, the result is information technology, or "infotech". Information technology is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information. Presumably, when speaking of Information Technology (IT) as a whole, it is noted that the use of computers and information are associated.

The term "information technology" evolved in the 1970s. Its basic concept, however, can be traced to the World War II alliance of the military and industry in the development of electronics, computers, and information theory. After the 1940s, the military remained the major source of research and development funding for the expansion of automation to replace manpower with machine power.

Since the 1950s, four generations of computers have evolved. Each generation reflected a change to hardware of decreased size but increased capabilities to control computer operations. The first generation used vacuum tubes, the second used transistors, the third used integrated circuits, and the fourth used integrated circuits on a single computer chip. Advances in artificial intelligence that will minimize the need for complex programming characterize the fifth generation of computers, still in the experimental stage.

The first commercial computer was the UNIVAC I, developed by John Eckert and John W. Mauchly in 1951. It was used by the Census Bureau to predict the outcome of the 1952 presidential election. For the next twenty-five years, mainframe computers were used in large corporations to do calculations and manipulate large amounts of information stored in databases. Supercomputers were used in science and engineering, for designing aircraft and nuclear reactors, and for predicting worldwide weather patterns. Minicomputers came on to the scene in the early 1980s in small businesses, manufacturing plants, and factories.

In 1975, the Massachusetts Institute of Technology developed microcomputers. In 1976, Tandy Corporation's first Radio Shack microcomputer followed; the Apple microcomputer was introduced in 1977. The market for microcomputers increased dramatically when IBM introduced the first personal computer in the fall of 1981. Because of dramatic improvements in computer components and manufacturing, personal computers today do more than the largest computers of the mid-1960s at about a thousandth of the cost.

Computers today are divided into four categories by size, cost, and processing ability. They are supercomputer, mainframe, minicomputer, and microcomputer, more commonly known as a personal computer. Personal computer categories include desktop, network, laptop, and handheld.

IT includes processes such as acquiring, processing, storing and distributing the information. It is commonly referred to business applications based on computers.

In small business normally software packages are purchased for in house processes and different IT companies are hired for other solutions like marketing, networking, website development etc. The businesses which are running on larger scales manage information technology as a separate department and hire their own staff to fulfill their requirements.

Purchasing of computer equipment, software applications, hiring of additional staff and constant upgrade in information technology as required with increasing global completion, creates difficulty and hesitation to businessmen.

Regardless of the above described facts, effective implementation of information technology directly decreases liability by reducing the costs of expected failures as when the system is atomized the accuracy and reliability increases.

[William King - 2006 -] As it provides effective management of interdependence it enables the business to respond to the new and urgent competitive forces. Information Technology has a great impact on all trade industries and businesses from manufacturing companies to service providers, from retail stores to distribution companies and from education to health.

Information technology has introduced modern ways of working in any organization without radically altering them. Any traditional office which has different employees working at keyboards and notes being written on paper and manually exchanged, has remained remarkably stable, even if personal computers have replaced typewriters.

Some years back when information technology for was not introduced a number of employees had to be hired for each and every process and still it was very difficult to maintain everything in a manner to achieve old dated information in short time. Now with the help of this unique support huge data / information can be stored and accessed in a nick of time. Tracking of expenses, outstanding dues, future budgeting has become a lot easier and faster, and also with more accuracy.

The primary reason for the increase in popularity and utilization of information technology, especially in business is efficiency, speed, low procurement cost and accuracy in handling of multiples tasks simultaneously.

[Office of Advocacy, U.S - 2005 -] In a news release regarding Small Business Administration, it was stated that use of personal computers at home made the users more like to be business owners as compared to the non-computer owners, which reveals that the information technology has made itself an inseparable ingredient in the business world today.

Normally office routines are almost constantly, businesses loaded with the burden of increasing workloads and the pressures of work load, fall back upon technology for most of their administrative tasks. These tasks may include bookkeeping, inventory managing and communication. In the last two decades the number of home computer user has increased enormously. Many people have invariably taken to entrepreneurship in various different fields, this all became possible with the support of information technology. New methods have been introduced for processing of day to day business activities easily. Indisputably, the computer has turned out to be the top most technology development in the last century as it relates to businesses today, both large and small. Advances in this field of technology have initiated a immense number of business opportunities.

Today, it is possible to have many business functions to run on autopilot. A company physically present in USA can have its data entry and customer services centers in overseas countries, anywhere in the world. In this way many companies can increase their business by providing services to their customers 24 hours a day and seven days a week.

[2003, the U.S. Small Business Administration -] A report/survey was produced that more than 75% people related to small businesses had heavily invested in the new technology.

It is difficult to consider running a business today without information technology and either we say that businesses depend on computers or computers created business opportunities, all the credit goes to the information technology. Many simple, but powerful software packages have become useful in small businesses by reducing their tasks and creating new channels. Simple applications like word processors and spread sheets are quite helpful in maintaining accounts, finance and correspondence work. Keeping track of current work and future planning has become a lot easier as these applications allow the users to customize reports for information and do analytical work to suit their particular business.

Companies that are more innovative are much more successful in their use of technology. At the bottom of the companies' success are completely different attitudes toward a number of management issues, especially those that engage in information technology.

Information is the foundation of a healthy and competent business management. An information system allows the collection and processing of data to produce useful information for designated users at each level of management. Information

As the next decade will be greatly influenced by the accelerating change in of high-speed communications and technology, management must conform to well-defined principles, run on appropriate software, and be completely adapted to your organization within an integrated system usually known as Management Information System (MIS). A suitable information system will be set up or implemented.

Any selection of the MIS applications would depend greatly on the objectives and goals of every organization. Therefore, right objectives, goals and strategy is very important. Computers for instance, helped improve the way company's functions. Certainly, most managers, professionals, and information workers naturally recognize the significance of computers for organizing, streamlining, and simplifying their daily task. Defining information technology as a "general purpose technology" rather than a capital investment, the analysts recommend that its primary return on investment is in balancing innovations.

Such innovations pave way to improvement in business practices and work processes that in turn increase the company's output in terms of quality, timeliness, variety and more.

Therefore the company should consider technology innovations to help augment their financial status. A company who does not invest and adapt technology innovations is far behind in its financial success. This is also in respond to the changing needs of the customers. The operation of a small business can be enhanced and become profitable if it adapts the so-called technology innovations.

The use of internet and e-commerce has generated a bundle of opportunities for all types of business. This application is becoming extremely rooted into the economy, basically changing the way companies buy, sell, communicate, and collaborate. While small growing businesses once had to wait until new technologies became practical or affordable, today's Internet provides vast opportunities for driving down costs, reaching new customers, increasing productivity, and getting new products and services to market faster. Though sometimes huge amount is needed, but its worth in return it can give to the company, a profitable advantage.

The advent of the Internet has also substantially contributed in bringing down the costs of communication and marketing. In short, technology has reduced the overall cost of business operations.

Concededly, the small businesses involved can be divided into two types.

Firstly, there are the businesses whose skills are computer or technology-related and for whom a presence on the Internet is a natural extension of their activities.

These tend to be software houses and providers of computer services. Their businesses are already technically-based and involve considerable amounts of computer work. The second category of small businesses includes those that have no particular computer skills or interest in computing. These businesses cover areas such as personalized tailoring, travel services, hand-made crafts, wholesale wine supplies and even laundry services and hairdressing. Their presence on the Internet tends to be more opportunistic, arising from business contact with IAPs, collaborations with other business partners to form a consortium with an Internet connection, or the use of the services of an Internet business provider. But the simplicity of taking up the Internet can surpass an important task, the short- and long-term planning for the role of technology in your business. The fact is that capitalizing on technology means more than networking a few PCs or surfing the Web on a separate Internet account. To use technology to the company's competitive advantage, it has to build a strong foundation today and be able to accommodate growth and change in today's fast paced environment.

Selection criteria depend on the objective and goals of a certain company.

Therefore it is very important to identify the right objective, goal and strategy.

The company's objectives, goals and strategy are very important.

Computers for instance, helped improve the way company's functions. Certainly, most managers, professionals, and information workers naturally recognize the significance of computers for organizing, streamlining, and simplifying their daily task.

Depending on its objectives and constraints, each company should define its own unique strategy. Guidelines will be detailed into management rules and procedures that will optimize information flow. The first thing to do is to set a discussion about the company's strategy, to properly understand the business and organization by meeting with the company's management. After a careful study and analysis of the current system, the main flow of internal information (accounting, logistics, production...) and external information (customers, suppliers, bank...) will be identified. For the purpose of optimizing the managers' actions and accelerating succeeding tasks, we will classify this flow by sector (sales, stocks, purchases...). Once the new guidelines are validated by sector, the rules describing the management options together with the relevant managers are set up. In order that this reference framework, which is the backbone of the information system, be made clear to everyone and supported by the company's whole team, we will document it in an easily understood fashion.

Usually organizations contain systems which convert the data provided to the system which is known as input, to certain outputs. In this process inputs could be anything from people, to materials, to money to information, while the outputs could be products, services, waste, or even intellectual property. In the usage of this conversion, most organisations would carry out hundreds to thousands of processes that may have functions such as production, research, development, and marketing. These processes, in turn, would be overseen by planning, organizing and control mechanisms. All this can be done with the usage of different software packages, thus, implementing a reliable software package is the best way to set up an efficient information system.

Regarding business processes many definitions have been produced.

[Daveport - 1993, p.5] Has defined a process as "a structured, measured set of activities designed to produce a specified output for a particular customer or market"

[Rosemann - 2001, p.18] stated about business process as "the self-contained, temporal and logical order (parallel and/ or serial) of those activities, that are executed for the transformation of a business object with the goal of accomplishing a given tasks"

[McDermott 2001,p.58] According his vies an inquiry or a order from the customer, a quotation which is prepared for the customer, a delivery note from a vendor and so forth a parts of business object.

The use of standard management software applications permits the attainment of this goal through experience with various types of management systems; there should be someone to assist the company in selecting the optimal and economical solution adapted to your company.

To limit possible risks, the MIS consultancy division will recommend setting up an optimal information system with active participation of the company's team. Based on the company's guidelines and management rules, this new information system will take into account of the strategic priorities, as well as the data processing resources. A report of the company's specific characteristics will be given and is used for matching the appropriate software.

A thorough knowledge of the software applications' modules enables the rapid pre-select and suggests solutions corresponding to the company's requirements.

The solutions will then be presented, along with professional recommendations and the company will be able to make their own choice, under the most favorable conditions.

Once the management software application selected, the MIS team will assist in its implementation: installation, integration of software applications with the information system, transfer of previous data, testing reports, etc. New users will be trained and assisted during the start-up phase and help them document their own notes. The company should determined the suppliers thorough knowledge of, and experience with, software applications available on the market, together with a wide experience of project management enable them to guarantee a quick and low cost implementation of your solution.

An alternative set-up for the organization will be provided. This service could include securing the integrity of the newly phased-in system. Complete adherence to set strategies and policies and amply training the needed staff will be secured. Organizational restructuring and re-engineering is an option that many organizations take to secure viability in changing times. Re-structuring calls for a wide variety of skills to secure a smooth change from one organizational setup to another. We offer a step-by-step approach that allows for a trouble-free and safe execution of your new strategy without any legal or technical difficulty.

Initially, the MIS consultant will identify the management requirements and the constraints of the present organization. After comparing the information collected with the new guidelines and management rules a target organization model will be recommended. When this target organization model is approved, the steps needed to create it will be suggested. Three areas get thoroughly revised to ensure a high level of security: the assignments and the role of each function are determined using principles of internal control, procedures are written, and lastly job profiles are set up. Simplicity and flexibility are the two basic principles that guide the work. During implementation, the supplier should assist the training and coaching the staff as a team to boost the start of the company's re-structured organization, thus allowing it to reap the full benefits of the new information system.

Difference between innovative companies and less-innovative companies: Among the findings of The Innovator's Advantage are several that highlight the ways innovative companies differ from less-innovative companies in dealing with their customers:

Innovative companies have responded to the difficult economy by rethinking how they interact with their customers. Fifty-four percent of very innovative companies, compared with just 29 percent of non-innovative companies, have significantly re-evaluated and changed their marketing and sales strategies in the past year in response to economic and market conditions.

Innovative companies are more apt to use technology to help improve customer relationships. Very innovative companies are more than three times as likely as non-innovative companies to have installed a customer relationship management system (54 percent versus 15 percent), and more than twice as likely as non-innovative companies to have installed a sales system (47 percent to 21 percent). In addition to implementing such technology, innovative companies appear to value these systems more highly. Very innovative companies are nearly four times as likely as non-innovative companies to consider their customer relationship management system one of the three most strategically important to their organization (43 percent versus 12 percent) and more likely to consider their sales system as such (28 percent versus 17 percent).

Customer relationship management innovations improve business performance. The following illustrates how innovation in customer relationship management can result in superior business performance. Accenture has identified three broad innovations in the customer relationship management arena that a number of leading companies are using to improve their financial performance, generate competitive advantage, and dramatically increase demand for their products and services.

Turning customer data into profit: With customers growing ever more demanding and less loyal, every company must understand its customers extremely well. That includes knowing how they behave, what they buy and what channels they prefer. Technology makes it possible to amass the data containing these insights, but much of this data is rarely if ever used to its full potential. This is evident in the fact that many organizations still lack one, integrated view of their customers.

Reinventing the economics of customer interaction: For most companies, all the customers are not created equally. Some are more profitable than others, and some even cost companies money. Leading companies are embracing the ability to align sales and service resources according to customers' specific value and profit contribution to the company.

Transforming marketing into management science: Marketing executives will agree that today's customers are more diverse and more demanding than ever before. Yet many marketing departments still follow the practices of a bygone era to reach and influence their target audiences. In fact, the typical marketing organization remains untouched by the technology-powered changes that are optimizing other business functions, such as manufacturing, sales, customer service and human resources.

Importance of Technology Plan for Future Developments: Technology plan is a strategic tool and should be strongly integrated with the overall business plan. Wherever appropriate, it should provide a technology or Internet-based solution for key business challenges. These challenges include reducing costs, finding and serving new markets, streamlining processes, improving employee collaboration, increasing productivity without having to add new employees in a tight labor market, and improving customer service.

Moreover, the ideal technology plan establishes a solid foundation for growing your business in the Internet economy, through electronic communication, collaboration, commerce, and business processes. Often, this requires taking a completely new approach to business activities such as sales, marketing, procurement, human resources, design, and distribution. A technology plan should be developed. In today's world where internet economy is booming, the internet economy is making technology planning a critical business tool. For all the obvious benefits of technology plans, few small and growing businesses have them. However, today numerous emerging business drivers are forcing companies of all sizes, in all industries, to prepare for integrating the Internet into nearly every aspect of their daily operations due to the following reasons:

Competition is growing--The Internet is allowing new businesses to launch virtually overnight and has established businesses to jump into new markets quickly.

Cost pressures are rising--New e-commerce trading exchanges and e-market places are making the procurement process more efficient, which can save time and lower costs. Companies leveraging these tools to become more agile and lower costs are in effect presenting an ultimatum to their competitors: adapt, shrink your profit margins, or lose your market share.

Businesses are collaborating more closely with partners--In the new economy, businesses need to be agile and move quickly to seize opportunities. This often means going outside the internal organization to partner with suppliers and other companies for expertise outside your own core competency. Technology planning and the Internet enable companies to form seamless links to outside organizations.

Finding and keeping good employees is becoming a strategic advantage-- In a tight labor market, a strong technology foundation provides tools for finding and keeping the best employees, a key competitive advantage. And, growing through technology can be more cost efficient than increasing staff.

Customer expectations are rising--Customers can shop, buy, bank, watch the news, check the weather, and review stock prices and sports scores any time, day or night, on demand. Is your business equipped to meet this new standard for constant availability and instant response?

Productivity is soaring--Throughout the past decade, productivity improvements have accelerated an effect economists attribute largely to technological advances. To keep pace, your company must deploy technology intelligently to streamline processes and enable employees to communicate and collaborate more effectively.

Customers are taking charge--New business models are allowing customers to decide what information they receive, when and where to travel, even how much to pay. Technology planning can position your business to leverage this development to develop lasting customer relationships.

We may conclude that choosing scalable hardware and software that can seamlessly add users or support new technologies and applications is only part of the company's long term planning requirement. Technology plans should comprise whatever is the Company's future business plans include, such as new locations, additional employees, new customers, new product and service offerings, or a completely new business model that relies heavily on network- or Internet-based processes. Technology innovation is such an advantage.

After discussing the above mentioned complete processes and mechanism of business with respect to the us of information technology and selection of different major applications and the software techniques to help improve the performance of the business operation, it's now easy to understand what kind of strategy that the company will use in order to attain financial success.


  • William King (2005) Citing references : Role of Information Technology in Growth of Business [Internet], Available from : < - > [Accessed 26 November-2009].
  • Office of Advocacy, U.S (2005) Citing references : The importance of technology in business [Internet], Available from: < - > [Accessed 26 November-2009].
  • Victor Portougal - 2006, Idea Group Inc. - Business Processes: Operational Solutions for SAP Implementation. [Internet], Available from: <> [Accessed 27 November-2009].


  • Paul A. Strassmann. (1990) The business value of computers - p.400.
  • Lawrence L. Martin. (2001) Financial management for human service administrators - p.2.
  • Carey Butler. (1993) The role of information technology in business University of Melbourne.
  • Ewan Sutherland, Yves Morieux . (1991) Business & Economics - Business strategy and information technology - p.3.
  • Richard Baskerville, Lars Mathiassen, Jan Pries-Heje. (2005) Computers - Business agility and information technology diffusion - p.160.
  • B.Z. Barta, Arthur Tatnall, Peter Juliff, (1997) Business & Economics - Place of Information Technology in Management and Business Education - p.133.
  • Edward Mozley Roche. (1992) Computers Managing information technology in multinational corporations - p.17.
  • Giulio Cainelli, Donato Iacobucci. (2007) Business & Economics - Agglomeration, technology and business groups - p,83.
  • Dale Weldeau Jorgenson, Mun S. Ho, Kevin J. Stiroh. (2005) Computers - Productivity: Information technology and the American growth resurgence - p418. Alison Bettley, David Mayle, Tarek Tantoush. (2005) - Business & Economics - Operations management: a strategic approach. Allen, T., and M.S. Morton, eds. (1994). Information Technology and the Corporation of the 1990s. New York: Oxford University Press.
  • Shelly, Gary, Cashman, Thomas, Vermaat, Misty, and Walker, Tim. (1999). Discovering Computers 2000: Concepts for a Connected World. Cambridge, Massachusetts: Course Technology.
  • Webster, Frank, and Robins, Kevin. (1986). Information Technology-A Luddite Analysis. Norwood, NJ: Ablex.