Impact of IT on Operating Business

Impact of IT on Operating BusinessDecember 15, 2014ORIGIN OF THE REPORTThe report on Impact of IT on operating business is mainly prepared for the course Introduction to Information Technology. This report is mainly prepared for the partial requirement of the course. This report is basically assigned to get an exposure of the positive and negative impact of IT on operating business. In this report, we basically try to know The impact of IT on operating business & how to avoid negative impacts. This report is authorized by our course teacher Mohammed Mizanur Rahman, Lecturer, Dept. of AIS.,Comilla University. .OBJECTIVES OF THE STUDYThis study is designed to know the following aspect:1. To collect general knowledge about IT and its impact on business operations. 1. To get an exposure to the real business world activities through the use of IT.

SCOPE OF THE STUDY

This report is intended to provide knowledge about Information Technology, its impact on 0perating business. The paper includes an overall view of both positive and negative impact of IT on operating business and how to avoid negative impact of IT on operating business.

METHODOLOGY USED IN THE STUDY

For our report purpose, we have gathered great deal of information about Information Technology and its impact in operating business. We have worked with information technology which is operating in business sector in Bangladesh. Data have been obtained from the different books, annual report, newspaper, magazine, internet etc.

LIMITATIONS OF THE STUDY

Preparing the term paper we have faced some obstructions which are:1. Lack of proper information in the websites about the operation of Information Technology.1. Lack of required information in the text book.1. Lack of necessary information in the journals and magazine.1. Lack of experience.

IntroductionInformation Technology is a new aid factors for the trade, commerce and industry in Bangladesh. Now- a- days, IT sector plays a crucial role in the modern business. In the present day development of any country mainly depends on information technology. The role of IT sector for economic development of any country cannot be denied. Information technology makes todays business easier, faster, and profitable. In our term paper we tried to show a causal link between IT and business development in Bangladesh.

Information technology (IT) Information Technology is the application 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. Several industries are associated with information technology, including computer hardware, software, electronics, semiconductors, internet, telecom equipment, e-commerce and computer services. Information Technology infrastructure is the integrated framework upon on which digital networks operate. This infrastructure includes data centers, computer, computer networks, database management devices, and a regulatory system.

Background of ITHumans have been storing, retrieving, manipulating and communicating information since the Sumerians in Mesopotamia developed writing in about 3000BC, but the term information technology in its modern sense first appeared in a 1958 article published in the Harvard Business Review; authors Harold J. Leavitt and Thomas L. Whistler commented that "the new technology does not yet have a single established name. We shall call it information technology (IT)." Their definition consists of three categories: techniques for processing, the application of statistical and mathematical methods to decision-making and the simulation of higher-order thinking through computer programs.Based on the storage and processing technologies employed, it is possible to distinguish four distinct phases of IT development: pre-mechanical (3000BC 1450AD), mechanical (14501840), electromechanical (18401940) and electronic (1940present). This article focuses on the most recent period (electronic), which began in about 1940.

INFORMATION TECHNOLGY & BUSINESSWith the introduction of IT the business world changed forever. IT not only consists of tangible pieces of equipment, but also represents the capacity of the organization to produce, disseminate, and digest information. IT has been used in a number of ways including the mechanization of information processing, the augmentation of knowledge work, and the support of coordination in the organization. Sufficient IT investment is for basic mechanization of the records of production and distribution of goods and services (e. g. invoices) or for actions like themselves, electronic money transmit. Technology is also used for manufacturing (such as CAD/CAM) and computer- integrated manufacturing (CIM). A centralized database enables production and dissemination of information for management control as a by-product of mechanization.

Importance on Technology in BusinessTechnology is essential to the success of many businesses. No matter the size of your enterprise, technology has both tangible and intangible benefits that will help you make money and produce the results your customers demand. Technological infrastructure affects the culture, efficiency and relationships of a business. It also affects the security of confidential information and trade advantages.

Communication With CustomersTechnology affects a firm's ability to communicate with customers. In today's busy business environment, it is necessary for employees to interact with clients quickly and clearly. Websites allow customers to find answers to their questions after hours. Fast shipment options allow businesses to move products over a large geographic area. When customers use technology to interact with a business, the business benefits because better communication creates a stronger public image. Efficiency of OperationsTechnology also helps a business understand its cash flow needs and preserve precious resources such as time and physical space. Warehouse inventory technologies let business owners understand how best to manage the storage costs of holding a product. With proper technology in place, executives can save time and money by holding meetings over the Internet instead of at corporate headquarters. Business Culture and Class RelationsTechnology creates a team dynamic within a business because employees at different locations have better interactions. If factory managers can communicate with shipment coordinators at a different location, tensions and distrust are less likely to evolve. Cliques and social tensions can become a nightmare for a business; technology often helps workers put their different backgrounds aside.

SecurityMost businesses of the modern era are subject to security threats and vandalism. Technology can be used to protect financial data, confidential executive decisions and other proprietary information that leads to competitive advantages. Simply put, technology helps businesses keep their ideas away from their competition. By having computers with passwords, a business can ensure none of its forthcoming projects will be copied by the competition. Research CapacityA business that has the technological capacity to research new opportunities will stay a step ahead of its competition. For a business to survive, it must grow and acquire new opportunities. The Internet allows a business to virtually travel into new markets without the cost of an executive jet or the risks of creating a factory abroad.

IMPACT OF INFORMATION TECHNOLOGY ON OPERATING BUSINESSTechnology has positive affects on global business. The Internet makes it possible for people to communicate easily with associates in other countries. Ecommerce makes it possible for consumers to purchase almost anything from almost anywhere. And the flow of information is fast and often free once you have paid for Internet access. Technology has changed much of the world, but the effects are rarely more pronounced than in the area of business. Businesses today use technology in almost every facet of operation. They communicate with advanced network systems; they analyze data and plot forecasts using complicated programs; they utilize all types of digital media for marketing campaigns; and they streamline operations with new inventory and check-out systems. However, technology also has negative impacts on business. Technology is not without its downsides, but business cannot deny the impact it has had on every level .Here we are discussing about the positive and negative impact of IT on operating business.

POSITIVE IMPACTS OF IT ON OPERATING BUSINESSNo matter the size of your enterprise, technology has both tangible and intangible benefits that will help you make money and produce the results your customers demand. Technological infrastructure affects the culture, efficiency and relationships of a business. It also affects the security of confidential information and trade advantages. the most important positive impacts of IT on operating business are discussed below: Two types of positive impact :1. Key impact2. Others impact

1. KEY IMPACTIT significantly affects strategic options and creates opportunities and issues that managers need to address in many aspects of their business. This page outlines some of the key impacts of technology and the implications for management on:

i. E- COMMERCEE-Commerce is the buying & selling of goods & services or the transmitting of funds or data, over an electronic network, primarily the Internet. Internet Commerce is the use of the Internet for all phases of creating and completing business transactions. Various surveys suggest that the amount of business conducted online will increase ten-fold over the next few year.In our view too much focus of electronic commerce to date has been put on carrying out the final transactional phases - the ordering and payment. While such a perspective is all right when there are established supply chains for regular and routine purposes, this overlooks the wider perspective. Thus, in its broadest sense we view Internet Commerce as also including: The full sales and marketing cycle - for example, by analysing online feedback to ascertain customer's needs Identifying new markets - through exposure to a global audience through the World Wide Web Developing ongoing customer relationships - achieving loyalty through ongoing email interaction Assisting potential customers with their purchasing decision - for example by guiding them through product choices in an intelligent way Providing round-the-clock points of sale - making it easy for buyers to order online, irrespective of location Supply Chain Management - supporting those in the supply chain, such as dealers and distributors, through online interaction Ongoing Customer Support - providing extensive after-sales support to customers by online methods; thus increasing satisfaction, deepening the customer relationship and closing the selling loop through repeat and ongoing purchases.This wider perspective of Internet Commerce - as an ongoing iterative relationship that uses email, discussion lists, and other Internet facilities as well as the World Wide Web - is the strategy of most successful 'Entrepreneurs'. As in other marketing, the main categories of Internet Commerce are business-to-business and business-to-consumer.

ii. Business Strategy IT creates new opportunities for innovation in products and services. Services which used to be delivered in person can now be delivered over networks. Among the key levers are: resequencing: including parallel processing of data-bases simultaneity: making information instantly available in several systems (e.g via OLE) time extension: offering 24 hour a day; 365 days a year service portability: taking service and products closer to the user reusability: using information captured for one purpose (e.g. transactions), and using for others (e.g. customer targeting)iii. Organization cultureNewer types of IT such as electronic mail and groupware are creating significant changes in the way that information flows around group ware, and between them and their customers and suppliers. It can hasten the development of more open and innovative cultures. However, as experts like Davenport warns, and surveys from companies like Reuters confirm, the notion that "information is power" still reigns large in many orggroup warelso, our experience shows that many new systems fail to become accepted by their users, because the systems developers have not been culturally sensitive to the department or group ware, in which the new systems are to be used.iv. Organization StructureFor many years it has been argued that IT will enable larger spans of control and the flattening of group ware. This has at last happened, but due as much to initiatives like BPR (business process reengineering) and the drive to cut costs. Research on whether IT encourages centralization decentralizations produced ambivalent results. Many companies have centralized operations (for efficiency) while at the same time decentralized activities. It now seems clear that IT enables a greater variety of structures. In particular it enables more flexible and fluid structure.v. Management ProcessesIT is rapidly entering the era where it supports unstructured management processes as well as highly reutilized business processes. It provides more effective ways of accessing information from multiple sources, including use of external information on databases and the Internet. However, group decision support systems that operate in a meeting room environment can help enhance decision making, but it does need someone who is an expert facilitator to help the group master the technique of structured discussion.

vi. WorkIT is dramatically changing the nature of professional work. There are few offices where professional do not make use of personal computers, and in many jobs involving extensive information and knowledge based work, the use of the computer is often a core activity. Becoming effective not only requires traditional skills of organizing, thinking, writing etc., but knowing how best to use the power of IT for researching sources, accessing information, connecting to experts, communicating ideas and results, and packaging the knowledge (asset) for reuse. vii. The WorkplaceThe way in which IT diminishes the effect of distance means that it creates a variety of options for reorganizing the workplace. At a basic level, it can provide more flexibility in the office, allowing desk sharing and a degree of location independence within a building (this will develop as CTI (Computer Telephony Integration) and wireless PCs become more firmly established. At another level it permits the dispersion of work teams, thus saving costs of relocation and travel. It has also created the mobile professional and also allows people to work effectively from home.

2. OTHER POSITIVE IMPACTS Other positive impacts of IT are given below:i. Product DevelopmentInformation 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.ii. Stakeholder IntegrationStakeholder 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 participants.iii. Process Improvementprocess 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.iv. Cost EfficienciesAlthough 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.v. Competitive AdvantageCost 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.

vi. GlobalizationCompanies 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.

vii. SpeedTechnology allows businesses to do everything faster. Many processes that once required ledgers, checkbooks and journal notations have now moved onto computer systems Logging in and out, updating inventory information and communicating can now happening much more swiftly. This allows businesses to react immediately to any changes.businessman works outside of the office.

viii. AccuracyA properly designed computer program does not make any mistakes, and its computations (not its inputs) are free from human error. This means that a calculation done by a computer program (like Excel) will always be accurate and trustworthy. Unless the coding or the inputs are wrong, there is no chance a program can produce inaccurate data.Computer reports

ix. CompetitionTechnology moves very quickly, constantly evolving and creating new devices and faster systems. Businesses note these changes and attempt to move with technology, adapting it to their present and future needs while also keeping a wary eye on the technology competitors are using. The end result is an increase in the evolution of technology and its application to business, a process by which everyone benefits.

co-workers using handheld portable devices.

x. Business RelationshipsInternet technology -- such as chat rooms, Skype and other software -- has made it possible to hold meetings without all parties being physically present in the same place. A drawback is that meeting with somebody over the Internet is much less personal than meeting face-to-face. Internet technology in business decreases the personal aspect of business relationships. Business people used to network in restaurants and on golf courses. Today, the lack of physical proximity decreases brainstorming and other communications that use a personal touch.xi. Increases production and saves time Business use technology to automate tasks. A good example is a bakery which uses automated temperature censors to detect any drop or increase in room temperature in a bakery. These censors will send information directly to the operator and report any temperature change. This saves the bakery time and it also results into quality products.xii. Improves data storage and file management Businesses use cloud hosting services to store and backup business data. Also it saves on paper work and makes transfer and access of data remote. With services like Dropbox.com, business owners can access their data any time any where. Information and data are very important tools for a business, so it is very essential to store them safely and also access them at any time of need.xiii. Improves financial managementAccounting software like Quick Books , Bookkeeper , Sage 50 , and Account Edge can be used in performing various accounting tasks in a business. Business owners can easily balance their books with less experience in accounting because these softwares are well equipped with every tool needed in accounting and they also have a help section which can be referred to in case a user is stuck.xiv. Cuts costs of operation and increases on ROI Communication technology and social technology have made business promotion and product launch affordable. Many small business have found ways to use social technology to increase on their brand awareness and get more clients at a minimal cost. In business, factors like cost of operation play a big role in the development and growth of that business. So when businesses use information technology to cut down on costs of operation, then their ROI will increase which will result into business growth.xv. Improves business to consumer relationship Businesses have embraced the social technology to interact with their consumers and fans. This creates a strong business to consumer relationship and it results into business growth and expansion. Information technology can be used to improve customer service in so many ways. For example, businesses can use internet to inform their customers about great deals and discounts, this makes customers feel special and it can drive their desire to buy. A good customer service can be used as a great tool by any small business to gain competitive advantage.xvi. Improves on business competitive advantage Companies have used technology to gain competitive advantage over their competitors. A business will improve on its technology and improve on its services and products which will make its customers happy, this will turn these happy customer loyal to that business and also invite more friends to use that service or product.

The Impact of Information Technology on Small Business

Technology has changed the way people do business. Technology provides a wide range of tools entrepreneurs can use to guide their new companies through the startup and growth stages. Small-business accounting, marketing and communication have been revolutionized by advances in computer, network and communications technology, and businesses in a range of industries continually adapt to take full advantage of technological developments.AccountingSetting up and managing a new accounting system can be a daunting task on your own. Modern accounting software packages simplify the process of setting up accounts and posting daily transactions. Managing accounts with a small-business accounting package such as Microsoft Money or QuickBooks can eliminate the need to hire full-time or third-party accountants. Accounting software also assists managers by creating informative reports and financial statements to increase decision-making effectiveness.The InternetThe Internet has all but leveled the playing field for small-business marketers competing against established businesses. With advanced video and graphics editing software, small-business owners can create professional marketing materials that reach thousands or millions of viewers online. Entrepreneurs can take advantage of cost-efficient web marketing tools such as Google AdWords to spread targeted marketing messages to a broad audience or a select niche. Several small businesses can share expensive advertising space online through banner- and traffic-swaps.Startup CostsDespite the numerous advantages granted by modern technology, there are still drawbacks to technology's inseparable relationship with the business world. One such drawback is the increase in startup expenses for new businesses. Almost every new business requires computer workstations, multiple telephone lines and network infrastructure before it can begin operations. Bootstrap entrepreneurs can often get away with using their own PCs and cellphones during the startup phase, but serious new ventures undertaken by experienced entrepreneurs usually involve large infrastructure projects to accommodate rapid growth.Time ManagementTime management is crucial for any small-business owner. Freeing up time from administrative minutiae can allow you to focus on more productive activities, such as drumming up new business and making vital contacts with suppliers and potential strategic partners. Advances in computer and cellular telephone technology allow business owners unprecedented access to in-depth scheduling and customer relationship management software, enabling busy entrepreneurs to hold "face to face" meetings online, from anywhere in the world.

NEGATIVE IMPACTS OF IT ON OPERATING BUSINESSIn spite of having so many positive sides IT has some negative impacts also. They are mentioned below:

i. Confusion

While technology is useful, its fast pace and complex systems can be confusing. If companies want to update their systems or change the type of technology they use, they have to retrain not only employees, but often customers. New employees must also be trained in using business systems, which can create confusion.

ii. AvailabilityTechnology is very available, meaning that it is easy for competitors of all sizes to use and learn. This makes it difficult for businesses to keep up with technological changes and vastly increases the number of competitors in their market as smaller business can use technology to offer value to a wider range of consumers.

a small business owner

iii. Crime

Technology also increases the possibility of crime. A tech-savvy employee can embezzle funds and make it difficult for the company to trace. Hackers can access personal and financial data of customers who trust the company to keep their information safe. Businesses must spend time and money developing safeguards against these events.

computer log in screeniv. Employee MoraleInstalling monitoring software in the workplace sends the message to employees that the company does not trust them, according to research done under the aegis of professor Howard Besser while teaching at New York University. Giving employees responsibility, trust and respect boosts their morale and productivity. Showing them that they are not trusted and must be recorded decreases morale and worker productivity. This is true regardless of the actual reasons for installing monitoring software, according to the same research.v. SpamSpam refers to unwanted and unsolicited email messages. Spam is widespread and has negative impacts on business, according to the article "Impact of Information Technology on Global Business" published by Purdue University. Wading through spam email is a waste of time, and spam filters can only do so much. Users of spam filters must then check for necessary email messages diverted incorrectly as spam.

vi. Brick and MortarThe popularity of ecommerce has had a negative impact on brick-and-mortar retail stores. Smaller stores are finding more and more difficult to compete with both Internet businesses and larger retail stores. For example, small community bookstores must compete with Amazon.com as well as large stores such as Barnes & Noble that sell in person and online. Sometimes the smaller stores end up going out of business.vii. Implementation Expenses Small businesses fail to afford this expensive technology so they end up losing their clients to a business which has improved its technology and provides a better service or product.viii. Job EliminationTechnology has replaced most positions which humans used to occupy. Accounting is now being done by software, so accountants run out of opportunities.ix. Security Breaches Since businesses store their data on remote cloud servers which can be accessed with a user name and password, they risk losing that data to wrong minded knowledge works, hackers or viruses, which can harm he business.

HOW TO AVOID NEGATIVE IMPACTS OF IT Four important steps :To prevent the harmful impact that this negative side of technology could have, personal finance expert Jean Chatzky developed 4 steps for avoiding them. These four steps help reduce the dangers of identity theft, hacking, and other unfortunate incidents.Chatzkys first step is to be very careful with WiFi-enabled devices. She recommends that businesses set up passwords for their wireless devices to prevent people from tapping into their system."For every wireless node thats sent out today, there is a program when setting up that allows you to decide whether you want to use security." He went on to say that it, "blocks outside people from getting into the system without having to do fancy footwork," said Jay Foley, the executive director of the Identity Theft Resource Center.Some small businesses do not have physical locations and often do their work in places such as Starbucks or Panera Bread. Since these places have public networks, Chatzky suggests that people avoid looking at confidential documents and materials while they are there.Secondly, she offers a warning about jump drives. Its hard to believe that the little thumbnail drives that make it so easy to transfer files could be dangerous. To clarify, its not the actual drives that are dangerous, but its what could happen with them that is dangerous. For example, what if an employee took a jump drive home that contained important business files and plugged it into a computer that was infected by a virus? You can see that the computers at the office could then be easily infected as well.Aside from the fact that company property should not go home, businesses should also install anti-virus software on the office computers to prevent a negative effect.Another area that could cause potential harm is transaction systems. Chatzky says that businesses need to constantly check their credit card machines for signs of tampering. Thieves often set up these systems in a way that creates a duplicate copy of all the credit card information. According to Foley, businesses should install security cameras and train employees to watch for this type of behavior.Lastly, paper can also be a technological concern. Now, you might be blinking or scratching your head, but it does fall into this same category of security concerns. We all know that technology has replaced paper in many cases, but there are a lot of places that still rely on hard copies. Doctors offices, for instance, still use a lot of paper filing systems. However, they dont always treat them the same way they treat their digital files. For this reason, Chatzky says that businesses should be sure to utilize tools such as shredders to provider security to both them and their customers.These security protections may seem small, but they could end up saving your business from hacking, identity theft, and more.

The Role of Information Technology in Business The role of information technology systems in a business environment can be classified into four broad categories. These categories include function performance, communication through networking, management and enterprise roles.

1. Function IT Systems

Function IT systems are applications that allow individuals to function effectively in the workplace. Examples of common IT systems that enhance workplace functions are word processor applications, spreadsheet applications, statistical analysis software and computer aided design (CAD) programs. Employees can work and perform their task individually or collectively using these specialized software technologies.

2. Network IT Systems

Network IT systems allow effective communication within and outside an organisation. Examples range from simple e-mail (electronic mail) to blogs, wiki sites, IM (instant messaging) and electronic conferencing systems. These types of technologies promote interaction and collaboration among working groups and also facilitate quick information flow at all levels.

3. Management IT systems

Management IT systems(MITS) can be defined as planned applications that are designed to process data and transform the processed data into useful information for management decision making.

Basic examples of management information systems are human resources management systems, financial management information systems and marketing management information systems.

4. IT Systems

Enterprise IT systems are technologies designed to integrate and manage entire business processes for large organisations. Typically, enterprise application software is hosted on large servers over a computer network. Transmission of information can either be internal or external.Examples of enterprise information systems may be accounting software, health care specific software or Electronic Data Interchange (EDI). Another good example of software application within this category is Customer relationship management software (CRM).

CONCLUSIONInformation technology has helped in shaping both the business world and our society in general. Many fields have been impacted by information technology and these include; education , health , entertainment , communication just to mention but a few. The impacts of information technology on operating business are profound. 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. As the world develops, more technology will emerge and this technology will have both positive and negative impacts. Information Technology has so many positive impacts. IT has some negative impacts too. But business cannot deny the impact it has had on every level.

Explorer26