This term paper discusses the strategic role of Information Technology in business management and its global implication. This term paper on Technology further discusses evolution of business and information technology systems. Use of the internet has helped business to make a strong impact on the globe. Information technology has completely changed the global organizational structures. Information technology helps achieve the organizational goals and objectives in different ways. The discussion elaborates upon the uses of Information Technology in different management functions. Technology effects an organization’s productivity, cost-effectiveness and ability to influence the society.
To discuss the effect of technology on business, let us first discuss the evolution of businesses and management systems. In ancient times, the business involved more face-to-face conversations. The societies were small; people knew each other and exchanged goods and services. The type of business was bartering. Then currencies came and the function of businesses changed. The businesses were not the exchange of goods, but about buying and selling of goods and services. A major development occurred with the industrial revolution, which brought in mass production and mass marketing. This brought in the demand for specialized and skilled people. All these developments progressively changed the organizational structures and functions (Levine, Locke, Searls and Weinberger, 2000).
In the recent times we have seen the technology advancing at a faster pace. For instance, it required 50 years to commercialize telephones but it only took five years (Amor, 2002) for the internet to be common. There were few multi-national companies prior to the advent of internet. The internet has provided younger companies to do e-business and grow globally. It took many years for the companies, such as GE (founded in 1892, with its market value of 389 in 1999), IBM (founded in 1911, with its market value of 223 in 1999), Wal-Mart (founded in 1969, with its market value of 211) to reach their present positions. On the other hand, the relatively young companies using e-business, either reached or surpass the old blue chip companies. For example, Microsoft (founded in 1981, with a market value of 483), Lucent (founded in 1995, with a market value of 202) and Cisco (founded in 1984, with a market value of 220). In 1995, the number of public internet companies was four; in 2000 the number was 162. The combined market value rose from $1.9 billion to $451.3 billion. This indicates the number of companies in creased 40 times. In addition, the combined market value of these companies increased 200 times.(Wilson, 1999). This depicts the strategic role of information technology to increase the investment in businesses and their globalization.
For the purpose of illustration, let us take Ford Company. It uses Information Technology in all its important management functions. The Information Technology Department has three core groups: Process and Technology Group, Application Development Services and Information Technology Infrastructure Group. “The PTG is responsible for knowing the business and the technology, and identifying opportunities to improve both. Our departments are Manufacturing & Supply Chain Systems, Product Development Systems, Global Consumer Systems, and Management Systems”. Similarly, the Application Development Services “is the engine behind our support of Ford Motor Company. We are responsible for software architecture, delivery, maintenance, and support across the life cycle.” And “Information Technology Infrastructure is the framework that holds it all together.” (Company Official Cite, 2002). The senior management of the Ford Company looks towards the Information Technology Department to assist them right from the inception of a new vehicle through the entire product life cycle. The Information Technology department also provides backbone support to the suppliers and consumers. The Information Technology department does business process re-engineering and integrates the best practices to achieve the management’s goals and objectives.
Let us do an analysis on our sample company. First, we find that information technology is an integral part of decision making within the management. However, the core business of the company is not information technology but we find extensive use of it. The senior management of the company starts business cycle of a product (a car for example) with the help of IT. The car is designed, simulated and test even before going to its production stage. IT department uses business process re-engineering to suit each new product by employing the best practices within the organization. The IT department is responsible, accountable and has multi tasking individuals. They know and understand the business practices of the organization. This leads to a matrix structure of the organization. This also indicates that Ford is able to achieve its objectives with less human resources. In this information era, companies with less people perform better because they are easier to manage. Since IT department is involved at every stage of the product life cycle, Ford is able to optimize the available resources. Ford is able to respond to the changing market conditions quickly because of the backbone support of the information technology department. Its sales and marketing, customer service and production departments can effectively communicate to reposition themselves in the changing market at a minimum possible time. (Ford’s Official website, 2002). The same applies to many other organizations that are using information technology for all of their important management decisions.
Technology is an “industrial arts” (Price, 1996). It is not restricted to schools of engineering only. Technology is available in the society as well as people in the organization. Successful organizations cater to society needs using new and innovative technologies. Since the technology is available anywhere in the globe, successful organizations adapt them and increase their productivity.
Most of the organizations do not strategically manage technology. They fail on three accounts. First, they are unable to understand the status and trends of the technology for their competitive advantage. Second, they focus too much on product technologies but fail to focus on process technologies; especially the information technology for their business advantage. Lastly, they are unable to accurately assess the cost and time of converting market need into demand. Information technology demands companies and management to perform effectively and faster than their competitors (Price, 1996). The main objective in the information technology is to deliver the services as soon as possible. Corporate people feel an urgency because of the increasing resource requirements for technological advancement. This same implies to the accelerating rate of global technology diffusion (Price, 1996). At this moment in time, the management balances the complexities of people and technology; along with the goal of earning maximum profit.
Always when human beings live in present, there are perceptions regarding future. A primary concern among the people is where will these advancements of technology lead them? No one has the accurate answer to this. The future management would be more based upon the virtual employees (Armor, 2002; Malhotra, 2001; Perseus Publishing, 2002). The speed at which the technology proceeds might make it harder for the businesses to decide on how to approach certain things. Technology will perhaps quickly outstretch human’s ability to perform as effective as technology. Businesses, management and life require serious and quicker adaptations to change. In order to do these, people must understand that technology is the changing factor that is most responsive to creative styles in management action. It all boils down to the adaptation of technology in the profit of organization, people, profit of business and mainly the globalization of the company. Over the internet, the world has access to a single business. This builds closer relation with the customers and employees (Perseus Publishing, 2002). Shopping online allows and provides the flexibility to customers of time to market. Putting the business on the net, will require less people to manage and therefore reduce the cost. An example of it can be seen in the type of a bank: ING Direct. ING Direct only has its head offices; however, the transactions and other financial tasks are performed over the net. It is a neat way of attracting customers and lowering down the costs as well. On the contrary, the e-businesses might build some concerns. For instance, the channel conflict and increase in competition. Due to increase, a major concern is regarding customer acceptance and pricing. This leads us to the two types of businesses that will be common in future, such as, service providers and service developers (Armor, 2002).
In the nutshell, the strategic role of information technology is evident from the beginning to the present and from present to the interpretation of the future. Now, every business uses technology in one form or the other to make the task easier and increase productivity. These changes lead to the infrastructure of the formation of business management. Due to this change, the organizational structures are changing to more of a matrix form. Since the businesses need to grow, they globalize. Now, the most effective way to globalize as we see in using the information technology. This is clear now that technology provides management the means for coping with the changes in the internal and external factors to achieve competitive success and the fact that the evolution of technology has certainly changed our view and life style of society.
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