In todays competitive business environment, speed is the key for all the business processes. A business process would be inefficient and ineffective without the aid of current information technology. Today, information technology provides communication and analytical power that organizations need for global level business. Globalization of world economies has enhanced the values of information to business organisations and has brought success and new opportunities to the business. All types of business have to compete with their competitors for capturing majority of the market and for innovating better products and services. For this reason, they need to adapt to the technology to handle information systems. Because, being the first to introduce a new product in the market leaves a significant mark to the industry and will give a competitive edge. This advantage is not possible without information systems and technology in business. In addition to this, for improved customer service, easy information retrievals, quick preparation of financial transaction, easy building of strategic alliances etc., IT plays a major role in business.
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Importance of IT in business
Almost all kinds of businesses are relying on computers for automating their traditional processes. Businesses use wide variety of databases, management information systems, information sharing platforms, data sharing networks, internet, intranets, machines, and equipments etc which highly rely on computers. Computer technologies are not only used in the field of finance or marketing, but also in the medical industry, human resource departments, inventory control management systems etc.
For example, in a manufacturing firm, all transactions done in a warehouse is loaded in a transaction processing system. If the system is not around it will take a lot of time and also manpower to record all the raw materials coming out of the warehouse for use in the production floor which delays production and shipping of parts. The lead time from ordering to producing and shipping the product will be a long which customers will not understand. Speed is very important to be competitive.
IT and competitive Advantage
The current challenge of implementing IT-dependent strategic initiatives like business process reengineering, customer intimacy, organizational learning, and even organizational transformations makes an IT capability very valuable in meeting business. In addition, the underlying resources, or IT management assets, can be difficult for competitors to imitate. Thus an IT capability has the potential for delivering long-term competitive advantage.
The U.S. trucking industry was deregulated in 1980. Schneider National, Inc., is a large truckload carrier. The top management recognized that IT support of operations would be critical for maximizing utilization of its tractors and trailers. Schneider quickly developed freight modelling software and provided a management interface to the data that enabled the firm to offer more reliable customer service with a lower cost base than most competitors. Schneider National is successful because it has developed a capability for applying IT to ever-changing business opportunities. (Ross, Beath et al. 1996)
Impact of IT in business
Effective implementation of information technology would decrease liability by reducing the cost of expected failures and increase flexibility by reducing the cost of adjustment. Information Technology is having impact on all trade industries and businesses, in service as well as in manufacturing. It is affecting workers at all levels of organizations, from the executives to middle management and clerks. Information technology is increasingly becoming a basic factor of all types of technologies such as craft, engineering, routine, and non-routine. The advances in Information Technology would result in remarkable decline in the costs of synchronization that would lead to new, concentrated business structures. It enables the business to respond to the new and urgent competitive forces by providing effective management of interdependence.
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Enterprises would need effective information systems to support and to deliver information to the different users. Such information systems would include technology that support decision making, provide effective interface between users and computer technology and provide information for the managers on the day-to-day operations of the enterprises. Information is needed for various purposes and serves as an invaluable commodity or product. Information is very important aspect of decision making in all levels of management in enterprises [Hicks, 1993:648], especially in competitive business environment and managers utilize information as a resource to plan, organize, staff administer and control activities in ways that achieve the enterprises objectives. The ability of enterprises to realize their goals depends on how well the organisation acquires, interprets, synthesises, evaluate and understands information and how well its information channels supports organisational processes.
In the near future businesses would be facing a lack and a redundancy of information called information glut. To solve the information-glut companies will need to introduce methods for selective thinning out of information. Improvements in telecommunications will make it easier to control business units dispersed over different parts of the world. Advances in telecommunications, would result in increased distance-communication. Indirect communication would be preferred for well-structured information for routine, pre-programmed and decision processes. (King, 2006) Therefore, information technology plays a major role in the growth of business.
The effect of information technology on business advantages is likely to be durable since flexible IT build backbone of the firms for communication and exchange of information. Not only IT infrastructure enhances the competitiveness of the firms by increasing the coordination within and across the organizations, but also it can be an integral component of the business strategy (Henderson and Venkatraman, 1993; Laudon and Laudon, 2000). Thus, a flexible IT infrastructure may not only be important for driving business growth but also it could be a catalyst for innovation. Moreover, IT is important to improve operational efficiency and strategic advantages by reducing costs, improving agility, managing change, and maximizing performance (Henderson and Venkatraman, 1993).
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