Information Technology and Its Role in the Business

Basic Introduction of IT

The use of technology is increasing day by day in every aspects

of life. We all depend on technology and we use various technologies to perform
a specific task in our lives. Technology is becoming a part of our lives. Without
technology, we cant imagine life. Today we have various technologies which
impact on our lives in different ways. Information technology is implemented in
almost every section of our lives and business structures. Now, we are going to
tell you the advantages of information technology in business. IT has a lot of
advantages in business but we will discuss its some advantages that will show its
importance in all parts of human life and business structures.

Information technology profits the business world by allowing

organizations to work more efficiently and to maximize their productivity. Faster
communication, and the protection of records are the benefits that IT can have
on your enterprise. IT has to do with computer applications, on which every work
environment is dependent. Since computerized systems are most widely used, it
is advantageous to gather information technology into your organization. [1]

Now let us understand its benefits in business as given below.

1. Integration of Stake Holders

In business, a stakeholder is usually an investor in your company. Most of
the actions of stakeholders determine the result of your business decisions and
activities. The stakeholders are the workers of your company. They are
responsible for your company progress and future planning. They have a stake in
your companys success and incentive for your products to succeed. They are
your business partners, who rely on your success to keep the supply chain going.
The role of stake holders is very important for the progress of your business and
company in the world. They are regarded as large investors and they will either
increase or decrease the stakes in your company according to your financial
performance. Every business takes different approach to stakeholders. The
characters of stakeholders differ between businesses, dependent on the rules
and the responsibilities laid out at the establishment of your company.
Therefore, a stake holder is simply defined as a large investor that has a clout to
hold a viable stake in your company. [2]

2. Products Development

The duration that the products takes to get into the market can easily
be speeded up with this type of technology. This is the major reason that
makes it possible for most of the companies to write documents for
development of the products through gathering the best intelligence of the
market from customers, proprietary databases as well as sales
representatives. This type of businesses are also able to get computer

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software and manufacturing software. These kind of softwares gives you

opportunity to speed up decision making. All the manner of the businesses
are at liberty to enjoy these benefits and it also ensures that they would get
platforms for adhering to the changes noted in customer requirements. [3]

3. Increased Cost Efficiency

Maximizing the efficiency of the cost in the marketing campaign is

highly important in business. Technology allows the faster processing of data
and retrieval of information. It is much time consuming and full of human
errors to perform tasks given to people by hand. Computers and with the help
of technology these tasks are so simply solved.

The initial costs of implementing this kind of plan can be reasonably

high and in this case, the resulting benefits are rewarding since they can be
enjoyed in the long term. By this, businesses are able to reduce transaction
costs and they end up getting solutions that are production oriented. When it
is used frequently, it ensures that the customer service is not bargained and
this helps by increasing the welfares enjoyed by the company. [3]

4. Globalization

Information Technology (IT) is the most important factor in the process

of globalization. The phenomenon of globalization affects the economy,
business life, and society in many ways. The improvements of early 1990s in
computer hardware, software, and telecommunications have caused huge
changes in access to information and economic potential. These advances
have facilitated efficiency gains in almost all the parts of the economy. IT
provides the communication network that facilitates the expansion of
products and ideas. Creating effective channels to exchange information, IT
has been the catalyst for global integration. [4]

A competitive environment is essential for majority of the businesses

to succeed. Due to this reason information technology comes in handy. It
depicts businesses on local and international level and makes it easy to
create a good environment. It helps by integrating different facets together to
ensure that the business is placed at the forefront as far as provision of
quality services goes.

This is the reason that information technology attracts the attention of

majority of business people towards itself. It gives them the chance to save
on operation costs and also gives them a competitive edge. [3]

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5. STORING AND PROTECTING INFORMATION

Information technology uses electronic storage systems to protect the records of your
company. According to the Graziadio Business Report, published by Pepperdine
University, the secure maintenance of customer and the files of the patient are vital to
business integrity. Storage systems allows certain users to access, withdraw, add or
modify the documents in your company and helps in keeping the information safe.
According to an article in Science Daily, the security engineering systems of the
information technology protect your electronic information from being hacked. Electronic
security engineering systems means your important records will remain untouchable. [1]

6. WORK REMOTELY

Logical control access controls are equipments in the information technology

used for the identification, authentication, and authorization in computer information
systems. Logical access is frequently required for the remote access of the hardware and
is contrasted with the term "physical access," this term corresponds to the interactions
with the hardware in its physical environment, where equipment or tool is stored. [5]

IT systems gives you remote access to your companys electronic network, so that
you can work at home, on the road and anywhere in the world. This facility allows you to
increase your yield because you can still get your work done, even when you are not
physically present in the office. [1]

7. COMMUNICATION

In most of the companies and business agencies, electronic mail (email) is the principal
means of communication between customers, suppliers and employees. Email provides a
simple and inexpensive means to communicate with company members. [6]

Electronic-mail (E-mail) routers, servers, internal company billboards, and chat services
can serve as the backbone of the communications of the company. IT equipment can also
be used to send the status reports of the business to the executives and to connect with
the partners of the business and customers. [7]

Over the years, a large number of other communications tools have prepared, allowing
staff of the company to communicate with each other using live chat systems, online
meeting tools and video-conferencing meeting tools systems. Voice over internet
protocol (VOIP) telephones and smart-phones offer more productive ways for the
employees to communicate with each other. [6]

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8. INVENTORY MANAGEMENT

Inventory management is a software used for tracking of the inventory

levels, orders, sales and deliveries. This software can also be used in the
manufacturing industry for creating the work orders, bill of materials and other
related documents. [8]

Inventory management softwares are most commonly used by the

companies to reduce their carrying costs.

The features of the inventory management include order management,

service management, product identification, and inventory optimization.

9. DATA MANAGEMENT

Information technology helps us a lot in managing our important

information. With help of IT in data management, the employees of the company
store their huge amounts of data in a server computer and other storage
devices.

Data management is the disciplinary whereby all of the information

technology resources of a firm are managed with its priorities and needs. Such
resources include tangible investments like computer software, hardware, data,
networks and data center facilities, and the staff who are hired to maintain
them. [9]

The days of large file rooms, and the mailing of most of the documents is
fading fast. Today, almost all the companies of the world store their digital
versions of important documents on servers and storage devices. These
documents are available to everyone working in the company, regardless of their
geographical location. With the help of IT, companies are able to store and
maintain a huge amount of historical data economically, and the employees
working in the company benefit from immediate access to the documents that
they need. [6]

10. MANAGEMENT INFORMATION SYSTEMS

Storing data is a benefit only if that data can be used effectively. The
companies who have progressed in the world use that data as the part of their
planned planning process as well as the tactical execution of that strategy. With
the help of management Information Systems (MIS), we are able to track the
sales data, the expenses and the productivity levels. This type of information can
also be used for the tracking of profitability over time, maximize return on
investments and identify the areas of improvement. Managers can track sales on
a regular basis, allowing them to react immediately to lower-than-expected
numbers by boosting the productivity of the employee or reducing the cost of an
item. [6]

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11. CUSTOMER RELATIONSHIP MANAGEMENT

CRM can be defined as an organizational approach that pursues to

recognize and effect customer behavior through meaningful communications in
order to customize customer acquisition, retention, loyalty and profitability.

Companies are using IT to improve the way they design and manage the
client dealings. Customer Relationship Management (CRM) systems capture
every relation a company has with a customer or client, so that a more inspiring
experience is possible. If a client calls a call center with a matter, the customer
support owner will be able to see what the client has purchased, sees shipping
information, then call up the training manual for that item and effectively
respond to the matter. The whole interaction is stored in the CRM system, ready
to be recalled if the client calls again. The client has a better, more attentive
experience and the company profits from improved productivity. [6]

The most common features of the customer relationship management

include marketing automation, contact center automation, sales force
automation, location-based technology, and geolocation technology. [10]

12. SHOPPING CARTS

A shopping cart is a part of e-commerce software on a web server that

allows visitors or customers to an internet site to select the items for purchase.
[11]

Online shopping carts are much profitable for the development of the
database of the customer. When a customer or visitor wants to purchase a
product online, the software of the shopping cart automatically takes the order
and asks the customer to enter his personal details. The shopping cart
aggregates all the information about the customer into a database that the
business can manage it. Web hosts typically provide a shopping cart as the part
of their hosting packages at no more cost. [12]

The most common examples of the shopping carts include ZenCart,

CubeCart, and osCommerce. [12]

13. Enterprise Resource Planning Software

Enterprise resource planning (ERP) is a management software of the

business process that allows an organization to use a system of joined
applications to handle the work of the business and automate back office
functions related to technology, services, and human resources. [13]

Many of the worlds largest companies bought enterprise management

softwares for different kinds of activities. This software contains many memory

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modules designed to handle a particular facet of the business. Each module act
as a repository of the information for the members of the organization.

14. Monitoring
Now a days, information technology is widely used for the purpose of
monitoring the areas of the companies that are not using the resources
efficiently. For instance, Dell made use of supply monitoring and real-time
inventory to produce only that number of computers that were commonly
demanded by Dell customers. [14]

15. E-Commerce
E-commerce is become a huge part of business world. Internet and the e-
commerce have made many new ways in which businesses relate to their
customers. It also relates suppliers, partners, and investors. The open
architecture of the internet allows for new relationships and ways of doing
business among manufacturers, wholesalers, end users, and service providers.
These relationships are beginning to challenge the distribution structure that
dominated in 20th century commerce. [15]

16. Marketing
To become a successful marketing professional, you must make sure that
you have the knowledge and skills necessarily to promote your company to the
customers. It means that you must need to have a working knowledge about the
marketing theory.

To benefit from the technology, you must have to hire an experienced

person who works hard for the progress of your company or to get enough
training to do some part of the work yourself. Almost all the organizations of the
world hold marketing seminars to educate their employees or workers on how to
embrace new marketing tools provided by technology. It is necessary to keep
your staff up-to-date so that you reduces the cost of hiring the professionals and
increase on production. [16]

The most common examples of the information technology tools that the
marketing professionals are likely to use are blogging, customer relationship
management, e-mail marketing, computerized presentations, e-mail
communications, graphic design software etc. [17]

17. Business process re-engineering

It is a business management strategy, originally pioneered in the early
1990s, focusing on the design and analysis of business processes and workflows
within an organization. Business process re-engineering aimed to help the
organizations on how do they work in order to improve customer service and
become a professional competitor. [18]

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18. Business Transformation

Business transformation is making changes in how business is conducted
to help cope with a shift in market environment. [19]

Business transformation is achieved by one or more of rearranging the

way the staff work, the core product, how the organization is structured, and
how the technology is used. Typically organizations go through many stages in
transforming themselves. [19]

Identifying the need to change and gaining general agreement

amongst the stakeholders that change is necessary.
Agreeing what form the change should take, the vision and the
objectives of the change that describes a better future.
Understanding what the organization is changing from and what the
needs to change in detail.
Designing the new way of the organizational working, its support
and management.
Implementing and testing the changes, usually in waves, typically
over a years.
Bedding in the change so that the organizations cant move back.

19. Organizational Transformation

It is a Second-Order planned change by which radically and objectively
reform themselves to grow and survive in the changing business environment. It
calls for new organizational values and assumptions, which include the
redefinition of organizational mission, structure, management style, strategy,
cultures, and processes.

The advancement in the information technology, today, has made

unparallel potential for the organizations to enhance their ability, reach, and
performance to compete in the global market. The new business challenges and
risks have merged with the advancement of information technology that
changed established market rules, regulations, and global economies.

The most important factors of the information technology are:

Intensive market competition.

Organizational change/reconfiguration.
Rapid advancement in ICT.
Globalization.

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20. Accounting
Information technology is present in many accounting offices via printers,
computers, and other related equipment. An intrinsic part of financial processes,
information technology is taken for granted in accounting offices. For instance,
you can be able to go online and check your cash balance in the bank whenever
you wish to do so. [20]

Information technology (IT) has impacted the processes of the accounting

in a very pleasing way. It is very difficult to find a person doing manual
accounting with pencil and paper in this modern age. Since accounting is only
dealing with the information, so any advances in it will have very positive impact
in the department of the accounting. [20]

The biggest impact of information technology on accounting is the ability

of the companies to develop and use computerized systems to record and track
financial transactions. IT computer and network systems have shortened the
time needed by accountants to present financial information to management.
This system allows the companies to make individual reports for management
decision making. [21]

The most common capabilities of computerized accounting systems

include improved accuracy, better external reporting, increased functionality,
and faster processing.

21. Accuracy
Accuracy in reporting and recording is greatly valued in accounting work.
Technology has a very beneficial effect on accounting work. IT has a positive
effect in accounting applications because most of the calculations done by a
computer program rarely experience calculation errors.

We have investigated the effects of the information technology on

analysts forecast accuracy. Our study suggests that it has increased with the
increase in information technology.

We capture the growth with seven proxy variables:

Total sales of related firms.

Number of websites.
Number of computers sold.
Number of registered domains.
Number of the hosts.
Packets of the information transferred.
Number of the bytes.

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These results are very similar with our hypothesis. It is an evidence of a

positive effect of the information technology on overall information environment.
These findings are much important for the investors. [22]

22. Flexibility
An accounting department severely needs flexible technology that can
adapt as the practices of the businesses change. Information technology
associated with the accounting must be flexible to accommodate the changes.
For instance, software must be liable to be updated to offer new processes and
the ability to send the invoices. Otherwise, your software will become obsolete.
Accounts also use software for taxes and other accounting needs. [20]

Flexible technology is severely needed in the accounting departments.

The accounting system should have the capability to adapt with changes in
business practices. Information technology (IT) concerned with accounting
creates flexibility to accommodate the changes. Some systems are capable for
upgrade when volume of transaction increases effectively. [23]

23. Input, output, and processing

Does not only the clients need to have a proficient financial processes but
the accounts also need some software programs that keep the track of the
clients accounting related information with the enhanced efficiency. Most
accountants work with the computer programmers to develop a digital process
that will organize their history of the clients. When a client enters his data in the
computer program, the processing cycle gives instructions to the computer to
process the data of the client. This allows the client to change the data into the
useful information.

Now the output, transfers the processed information to the accountant.

He/she can thoroughly check the data and interpret the financial statements of
the clients. This increases the success of the clients. All the records of the clients
can be organized and stored on the computer system of the accountant. Rather
than bringing a suitcase full of file folders, the documents can be carried on an
encrypted storage device or on an encrypted laptop. The accountant has
sensitive information of the client but yet at his/her fingertips, ready to perform
accounting, statistical or forecasting analysis. The program is stored on the
computer hard disk and the data is used to prepare the taxes of the clients. The
need for file storage room has been eliminated. [24]

24. Accounting Information system

An accounting information system is a system of storing, processing, and
collecting accounting and financial data that is used by decision makers. An
accounting information system is a computer-based method for tracking
accounting like activity in conjunction with IT resources. Accounting information

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systems are designed to support all accounting activities and functions including
financial accounting, auditing, reporting, and tax. The most common accounting
information systems are financial reporting modules and auditing.

25. Pros :
Windfall: In my opinion, you could make much more money that
working for someone else.
Security: No one can fire you.
Autonomy: Be your own boss, and make all important decisions vital to
your own success.
Discovery: Put your own ideas into practice, and see what does not work
and what does work.
Self-Belief: Take personal satisfaction of creating and running a
successful business on your own.
Establishment: Put down roots in a community; provide a sense of
belonging and stability.
Interest: Work in a field that you really enjoy. [25]

26. Cons :
Investments: In my opinion, you have to take a large financial risk of
losing money.
Strain: You may have to undertake unpleasant tasks, like
firing someone.
Devotion: You will likely have to work late night and long hours and may
have very less opportunities to take vacations.
Inconsistency: Your income may not be steady; there may be times when
very little is coming in at all.
Learning: You may need to learn new disciplines like inventory control,
advertising, production planning, market research, and general
management. [25]

27. Conclusions
Information technology has many advantages as well as disadvantages in
business. But I think that it is impossible for us to live in this world without
information technology. It take us to digital world. Now the information
technology is growing very fast in the world and it reduces the time in every
aspects of our business activities. In my opinion, it is impossible to attain long
term business success without leveraging the benefits of IT in this modern world.
The companies have to bear a reasonable cost to achieve this success because
using an innovative approach in business strategy and making right decisions at

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right time are the prerequisites of the business success. Overall information
technology is very important in every success of life and business activities.

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