Value of information technology

For business Activities

Hamilton Setende







All rights reserved
Hamilton Setende
2013

Contents
1. Introduction ................................................................................................................................... 1
2. Background To the Research Problem ....................................................................................... 1
3. Problem Statement ........................................................................................................................ 2
4. Aims of the Research .................................................................................................................... 3
5. Research Questions ....................................................................................................................... 3
6. Hypothesis ...................................................................................................................................... 3
7. Scope of the Study ......................................................................................................................... 4
8. Methodology Outline .................................................................................................................... 4
9. Broad Overview of the Research ................................................................................................. 4
10. Research Value .......................................................................................................................... 4
CHAPTER 2 ........................................................................................................................................... 6
2. Literature survey ............................................................................................................................. 6
2.2. Does Information technology matter ......................................................................................... 6
2.2. Managing information technology for business value ............................................................... 7
2.3. How Information and technology provides competitive advantage. ......................................... 8
2..3.1. What is competitive advantage? ........................................................................................ 9
2.3.2 How to use IT to create competitive advantage ................................................................. 9
2.4. Role of the Chief Information Officer ....................................................................................... 11
2.5. How Information technology supports the business and its activities ..................................... 11
2.6. Advantages of information technology to businesses and its employees................................ 12
2.8. How Information technology help a business to be more productive ..................................... 14
2.9. Advantages and disadvantages of Information Technology in decision making ..................... 14
2.10. Advantages of using Information Technology for Employment .......................................... 15
2.11. Advantages and disadvantages of Innovative Information Technology .............................. 15
2.13. Conclusion ............................................................................................................................... 16
CHAPTER 3 ......................................................................................................................................... 17
RESEARCH METHODOLOGY .............................................................................................................. 17
3 Introduction .............................................................................................................................. 17
3.1. Research Methods ...................................................................................................................... 17
3.1.1. Qualitative research............................................................................................................. 17
CHAPTER4 .......................................................................................................................................... 24
RESULTS AND FIDINGS ................................................................................................................... 24
4. Introduction ............................................................................................................................... 24


4.2. Demographic Study ............................................................................................................ 24
4.2. Questionnaire ...................................................................................................................... 24
4.2.1. Closed Ended Questionnaire ................................................................................... 25
4.3. Open Ended Questions ................................................................................................ 29
CHAPTER 5 ........................................................................................................................................ 32
CONCLUSION AND RECOMMENDATIONS .............................................................................. 32
5.1 Introduction ................................................................................................................................. 32
5.2 Conclusion ...................................................................................................................................... 32
5.2.1 Reliability ............................................................................................................................. 32
5.2.2 Competitive Edge ................................................................................................................. 33
5.2.3 New Businesses Opportunities ............................................................................................. 33
5.3 Recommendation ................................................................................................................. 33
ANNEX A: QUESTIONNAIR ........................................................................................................... 34







Abstract

This research project LVaimed at exploring the Value of Information Technology in
Business Dctivities. The primary focus of this study is to determine how Information
Technologies contribute to an organizations performance and how it can provide competitive
advantage.

The research also at the extent to which Information Technology has taken over business
activities and if businesses get value from the use of Information Technology.

The research was conducted by reviewing related previous research work done and also using
different research Techniques like interviews and questionnaires which included
participants from different industries.
It was found out that Information technology plays a big role in business activities.
However, this also comes with need of experts and specialists to use this technology as well
as training of the other employees who use the technology in everyday business activities.
The study also provides insight on employees views and opinions on the use of Information
Technology and how it can be improved to help both businesses and employees.


















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CHAPTER 1

1. Introduction


Information Technology (IT) is the use of computers, telecommunications and equipment
to store, retrieve, transmit and manipulate data in the course of a business unit or end-user
accomplishing a goal (sward, 2006).

One of the main reasons businesses deploys IT, is because they improve productivity and
they assist employees in getting their work done.
IT in an organization, functions as support for the other functions or departments in the
organization or business, such as the accounting department, HR department,
manufacturing etc.

The value of Information Technology to Business Activities refers to the potential impact
that IT could have on an organization performance, this includes including increased
profits, increased productivity, reduction on costs, competitive advantage, and other
measures of performance (Devaraj and Kohli 2003; Hitt and Brynjolfsson 1996; Kriebel
and Kauffman 1988).

The value of IT to Business Activities can be evidenced by the following (sward, 2006):

Direct contribution to the companies market position or revenue
Deliverables and results that support solving customer business needs and
challenges.
Cost saving to customers or financial benefits.

Computers and other electronic equipments have taken the World by storm. Information
Technology has made life easier from the use of Cell phones that are used for various
reasons for example communication, cell phone banking, booking travel tickets and
paying utility bills. Laptops are used both at work and home, which has made it easier for
some people to work remotely at home hence saving the company money that would be
spent on renting space for people to work in and also cut down on transport costs.

2. Background To the Research Problem

Information Technology has become an integral part of our everyday life. In todays
world we can find IT in fields such as industries, medicine, commerce, education and in
our homes. In these days it is rare to find businesses that do not use IT in the running of
their operations. IT services and products have become an important element in how
businesses activities are conducted and as technology improves, businesses become more
and more dependent on the use of IT.
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IT offers the opportunity for high-quality production, increased personal creativity, and
expanded individual freedom. In addition, Information Technology could bring about
significant increases in productivity as complex and time-consuming human functions are
automated.

As technology improves every day, many processes and models have been developed on
the use of IT in a business, such as E- business and E- commerce, whereby business
processes and activities are carried out online, improving the way businesses are
conducted as well as cut costs for businesses since most operations is done online.

The value of IT to business Activities can be measured through the traditional
performance methods such as Return on investment (ROI), but this does not fully capture
the value that can be delivered through IT (Grembergen and Haes, n.d), instead the IT
balance scorecard (BSC) is better to measure tangible and intangible values of IT.
It is a management system that enables a fusion between IT and the business, and it can
also be a great way for effective IT management to report to the board and executive
management about the business value of IT (Grembergen and Haes, n.d).

As Businesses invest more and more on IT just like any other investment they make, they
would like to determine if its indeed providing some form of value to the business.

It is important to identify the link between IT investment and business value and in order
to measure and identify the business value of IT; managers have to answer the following
questions (Grembergen and Haes, n.d).

What do I get back if I spend extra funds on IT?
How does the IT I possess benchmark against competitor?
Does IT give me back what it promised?
How do past performances help me I learn in order to optimise my
organisation?
Does IT strategy fit with the business strategy?

3. Problem Statement

Information Technology has improved the way companies conduct their businesses
making the business more productive. Work is being done more effectively and
efficiently with the use of Information Technology.

However, with the constant growth in technology every day, this introduces change in
businesses operations. This becomes a problem when businesses and people in generally
do not embrace change which makes it hard to keep updated with technology.

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As companies adopt the use of IT in their business operations, they are also exposed to
risks such as cyber-crimes. These are crimes where computer systems are compromised
by hackers with the use of computer systems. Data can be stolen by these hackers and
used for criminal intent.

4. Aims of the Research

The aim of this research is to analyse the values that business achieves from the use of
Information Technology in their everyday business operations.
This research also looks at how IT value in business is measured; how the business defines
and ties profits with the use of IT? This will be answered in the subsequent chapters.
Since Information Technology changes and improves every day, it is important to look at
how people who work with it cop with these changes.

5. Research Questions

IT services and products come at a very high cost. Companies have invested a lot of
money in their businesses just to have cutting edge technology. IT has taken centre stage
in business operations.

IT is often used to give a company that competitive edge over its competitors and with
IT; certain functions in the business are carried out more effectively.

This brings us to the following research questions:

Has Information Technology taken over business operations?
What advantages do businesses that use IT have over those businesses that do not?
What problems do Companies that incorporate IT into their businesses face?
How is IT value measured in business?

6. Hypothesis

It can be strongly agreed that Information Technology is the way to go. It has definitely
provided more good than harm and shaped a lot of todays business operations. Business
operations are done online, there is been real time operations also done which in return
has made life easy for both those providing and receiving business services.

With all this said, it is also important to note that Information Technology products and
services come at both high price and risk. IT is very expensive both to acquire but also
requires expenses to monitor and maintain it. IT is risky in that people are always
targeting operations done online or cell phones and hacking into Business Information
Systems.
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7. Scope of the Study

This research focuses on how businesses get value from the use of Information
Technology. These values may be tangible and or intangible for example, use of portable
computers and real time availability of product information in market shares respectively
to help decision makers.

8. Methodology Outline

This research employs two types of research methods: Qualitative and Quantitative
Methods. These will be discussed in more detailed in Chapter 3.
Companies that use Information Technology in their everyday business operations will be
analysed to get as much detailed information as possible.
An online survey will be done where a questionnaire will be sent to some employees in
the company that directly work with Information Technology. This will get their opinions
and views about the Business Value of IT.
Interviews will also be conducted so that there is personal (face to face) contact with the
employees who work with Information Technology. This may give different responses to
the online survey since people may prefer conversions in form of interviews to online.

9. Broad Overview of the Research

This research looks at how Information Technology has improved businesses today. How
businesses have moved from the Stone Age to the new Age where every business
operation is simplified to fit the customer from shopping online in the comfort of your
home to paying bills still at home.

Taking further look at how business benefit from Information Technology, what is the
value they get from the use of Technology will be examined. Since there is too much
money spent on acquiring all this Technology surely it should provide value for money.
Activities that were done by human hands have been replaced with technology so that
there is less time consumed no with minimum errors, improved productivity and also less
costs. How does this affect human labour?

10. Research Value

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Information Technology has become part of everybodys life but more widely used by
businesses to expand their horizons in terms of providing products and services to their
customers locally and internationally.

Businesses use services like E-commerce and E-Business where they conduct their
business operations online hence making it convenient for both the organisation and their
clients. It is with such activities that have made IT an essential part of the business
generating revenue for the business.
The value of IT will also be discussed because businesses should get value for money if
they spend that much on IT. The values will be discussed as well as how they are
achieved.
Therefore, this research will explore ways and techniques that organisations can employ
to optimally use IT in their daily operations in order to generate value for the business.
As previously discussed, IT has become a vital aspect of not only the business community
but also non-profit organisations as well the lives of individuals. However, there are also
negative effects and challenges that organisations face in their day to day business
operations such as preserving the privacy of customer data on line, raising awareness
about the value of IT in business.

These challenges will be discussed in more depth in subsequent chapters and look at ways
how such risks and challenges can be managed.




















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CHAPTER 2
LITERATURE RIVIEW


2. Literature survey

The purpose of this survey is to give a brief overview or determine how information and
technology can be valuable to an organization, how IT fits in to the organizations
strategies and how it allows them to be economically competitive and productive.

Special focus on this literature survey will be given to the following topics:

1. Does IT MATTER?

2. Managing information technology for business value

3. Managing information technology for business value

4. Role of the Chief information officer (CIO).

5. How Information technology supports the business and its activities

6. Disadvantages of Information technology


2.2. Does Information technology matter

One question always asked is does IT really matter, how does IT how fit within an
organizations strategy and so create vale?

An article by Carr (2003), states that IT does not really matter. Carr (2003) argues that
technology is only advantageous to the ones that can explore it in the early stages of their
existence. As IT becomes more widely available and through vendor competition, the
prices drop and other factors lead these technologies to become commodities just like
water and electricity. He believes that although IT can be a strategic resource and
provides a way for companies to distinguish themselves from others, they can be
expensive and risky, he thinks it can only be effective if shared thus providing a barrier to
competition.

While Carr (2003) believes that IT does not matter, the purpose of this analysis is to
prove that it does indeed matter.

Information technology is a critical component to a business growth, as the use of IT
allows for the optimization of work, reduces the cost of products and services, and
increases business productivity, as it allows for the automation of data processing tasks,
which allows a business to serve more customers with less resources (anon, 2007). It
plays a vital role in business activities and its widely used by companies to improve
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communication, provides businesses with scalability and the ability to manage its
processes and its business models

In todays world, most business is conducted with the use of IT; most activities now
involve IT as many of them are now based round computers and IT; its use has become
inevitable, be it any company in any industry.Things that were earlier done manually
have been computerized. Managing accounts, transferring of cash, depositing,
withdrawing is no more a tedious task (Nutt, 2010). Businesses use computers to carry
out their activities and store and create their data using computers and with the use of
digital storage, company data is relatively more secure than manual filing as well as faster
to retrieve data.

One advantage of IT is the development of automated systems, it improves organizations
efficiency by reducing the repetition of certain tasks and it allows for a focus on other
tasks that would require more attention by the employees.

Information technology is one of the main drivers of globalization, it has not only brought
the world closer, but it has allowed the worlds economy to become a single
interdependent system,(Nana, 2009), The internet and intranet especially has changed a
lot about how things are done, it has improved how communication and collaboration
between businesses is conducted, businesses could now have direct contact with its
customers through the use of the internet as well as their suppliers, it also allows for
workers to work way from the office, bringing about convenient working conditions to
workers.

Firms can now even recruit their talent through IT, by using the internet, by advertising
their specific job vacancies and making it available to the right candidates, which in turn
reduces the cost of advertising on the traditional print newspapers etc.

IT with the internet also brought about E-commerce and E-learning, and with E-
commerce businesses are now able to offer their products to a greater audience or market,
eliminating the limitations of regional trading and letting a business expand to other
territories that they could never reach before.

2.2. Managing information technology for business value

Curley (n.d) states that IT assets lead to value by matching business opportunity and
needs with the potential of IT solutions. Business can utilise Information technology and
its services to solve business needs and capitalize on opportunities to create an output or
intangible benefits.

He states that IT has a value chain and its main value creating activities are: IT
innovation: this is the process of utilising IT for the purpose of creating new solutions that
can bring about competitive advantage, as well as add value; solution delivery: utilising
the IT innovative solutions and finding a way to turn them into reality, this focuses on
deploying the solutions effectively and at a reasonable cost; and servicing provisioning:
the way these solutions are supported and serviced to support the activities and primary
services of the organization.

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Firms have implemented various types of checks and ways to investigate the value of IT,
in order and they also have implemented the use certain indicators to measure the
performance, they have checks such as IT governance that manages the flow of products
and services, all as ways to manage information technology in order to provide business
value. For example, Hilt and Brynjolfsson (1995) mention that there are three different
measures of IT value: Productivity, Profit and Consumer Welfare.

Productivity- This analysis the difference between the investment in IT (input)
and the productive value of that investment (output) e.g.: gross marginal
benefit.

Competitive advantage: Investigates how investment on IT can provide
competitive advantage to a firm. This checks how investment on IT could
increase a firms profits from any other firm in the same industry.

Consumer welfare: Estimates the total benefit that a given purchase offers to
consumers. The consumer surplus created by IT is positive and growing over
time

2.3. How Information and technology provides competitive advantage.

Information and technology is the nature of how companies compete, IT is used in many
companies as a way to lower costs and to differentiate, previously in an organization we
could have activities that required repetition and with IT, that has been lowered and
provides advantage for those companies that have those systems.

IT has become an important enabler of business activities in the world today, it is now
considered as a driver of companys growth strategy, and in order to for organizations to
attain their missions, goals and objectives, there is some need of an IT strategy that
complements the business strategy.

To understand better the purpose of IT and how it is a valuable tool for the enterprise, we
need to look at their goals and role within the enterprise.

Six major roles and goals of IT (Haag, n.d)

1. Increase employee productivity by reducing time, errors and costs using
2. Enhance decision making
3. Improve team collaboration
4. Create business partnerships and alliances
5. Enable global reach all over the world taking into consideration the culture of each
nation or society.
6. Facilitate organizational transformation as the organization evolves and responds to
the ever-changing marketplace.

This is all positive contributions that information technology can contribute to the
business and subsequently provide value to the business and giving new ways for a
business to outperform their rivals.


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2..3.1. What is competitive advantage?

Competitive advantage is advantage gained by offering customers greater value, either by
means of lower prices or by providing benefits and services that justifies higher prices.
(Ehmke, 2005)

A business builds competitive advantage by (Gareth jones, Jennifer M. George, 2006):

Increasing efficiency

o Reduce the quantity of resources used to produce goods or services

Increasing Quality

o Improve the skills and abilities of the workforce
o Introduce total quality management

Increasing speed, flexibility, and innovation

o How fast a firm can bring new products to market
o How easily a firm can change or alter the way they perform their activities.

Innovation

o Process of creating new or improved goods and services that customers
want
o Developing better ways to produce or provide goods and services

2.3.2 How to use IT to create competitive advantage

Information technology is not just a computer application, and businesses should become
aware of its benefits and how IT is able to provide them with competitive advantage over
their rivals.

An organizations success depends on how they can function in the particular industry
they are and how they can gain advantage over their competitors.

Methodologies have been developed, that help companies to devise their strategies, one
of these is the Porters competitive five forces, this five forces not only help companies to
develop strategies to increase their competitive edge, and it can also be used to enhance a
companys competitiveness.

Porters five models is a collection of major forces or 5 factors that could endanger a
companys position in a particular industry. Companies have to analyse the above porters
five forces, find ways of implementing them in order to position or to compete against the
market leaders.

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Source: Michael Porter, competitive strategy (1979)
Copyright 1980 by the free press
Figure 1: Porter's competitive five forces




Bargaining
Power of
Customers
Bargaining
Power of
suppliers
Threat of
New Entrants
Competitive
Rivalry within an
industry

Threat of
substitute
products
Our company Competing companies

1. Threat of new entrants:

New products and new technologies
are always being developed and
companies are required to be
updated on the developments in the
IT industry and be able to capitalise
on the developments that are
occurring so to be able to be an early
adopter of future technology that
may provide competitive advantage.

2. Bargaining power of customers:
One way to have customer loyalty
and therefore in here information
and technology can be used to create
competitive advantage by providing
unique and valuable information and
services that require distinctive
change to the customers
organization and so it is becomes
hard for this customers to choose the
competitors products, as it would be
more costly for the customer.

3. Threat of substitute product: IT is a main driver of innovation in businesses, IT
systems are being added into existing systems or models in various industry and so
creating innovation and providing value to this systems, and so at the same time totally
replacing the way of doing things.

4. Competitive rivalry:

Porter further proposed three strategies that a company could utilise by analysing the
factors that influence competitive advantage in their industry. These strategies are the
following:

The generic strategy is made up of:

1. Cost leadership: Businesses can use IT (utilising processes such as automation) to
lower their manufacturing or service costs and so providing their customers with cheaper
products it therefore reshapes the industry and forces the competition to adopt new
strategies and in the end bringing benefit to the customer.

2. Product differentiation: Businesses should be able to work towards developing new
IT systems or features that would differentiate their products and services, this new
features, should also be able to be innovative in a way that they are capable of limiting the
competitions differentiation advantage as wells as to provide products that will cater for a
particular focus market that would provide competitive advantage.

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3. Pursuit of niche products: Businesses should be able to utilise IT to create new
products and services that are unique and that could take them to new markets or develop
a new market in a whole, IT should be able to help the business make changes to their
process that would take the business to a new direction and help to cut on costs, improve
efficiency and create benefit to customers.

So as seen information system is a tool that can be used to provide more efficient
processes that would lead to lower costs for products and services, furthermore it can be
tied to a business strategy and help organizations to attain competitive advantage which is
a fundamental requirement for a business to function in its industry and survive for the
long term.

2.4. Role of the Chief Information Officer

With the increasing importance of information and technology in the information age, and
how they are an important tool in creating value for a business, there a need for
information technology to be managed in the same way as other business resources such
as people, finance and materials, so information technology need to be managed,
budgeted, evaluated and controlled in order to that it can be of financial use to the
business and create some sort of value that could be beneficial and a major business
resource to create competitive advantage.

The person responsible for carrying out those activities is a CIO. The CIO is a manager of
all IT related activities within the enterprise, he is an IT leader and works directly with
other managerial entities in the business in order to shape the IT direction towards that of
the business. He someone that has necessary business management skills as well as great
understanding for IT and how it should be managed in order to fit the business strategies.

He is responsible for identifying the IT needs of the organization, work closely with the
financial manager in order to device a cost effective budget that will provide this IT
resources to the organization at reasonable cost as well as identifying which resources
require more investment and would be more beneficial to the enterprise and accessing
how well a company spend on Information systems. He should be able to be knowledge
about the spending trends of its competitors and plan accordingly to that knowledge to be
in touch with industry and technological trends.

The CIO is responsible for aligning IT resources and strategy with business and
effectively helps the business innovate, he is responsible for helping to create an
information and technology culture in the business and contribute to the effective use of
information and knowledge in business units by developing appropriate information,
people and IT capabilities. This requires the CIO to have an understanding of how IT
processes affect the way thing are done in the organization.

So in all the role of a CIO is to deploy IT and control its cost, helping the business to
leverage information and technology in a way that it can be valuable to the business.

2.5. How Information technology supports the business and its activities

Information technology is able to provide support for activities in the business such as:
(Turban and Volonino, 2010)
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Operational activities (day to day operations of a business such as assigning
workers their tasks etc.), with the use of IT, programs could be used to track
how workers are carrying out their work, they can identify when the workers
have arrived to work, what time they left and what activities they have done
and the amount of work they have carried out, this is helpful in identifying
which workers are more efficient and therefore beneficial to the business and
so can be used to deploy resources to certain areas to speed work etc. or get rid
of workers that are not beneficial to the business.

This system are also used to place orders, such as purchasing orders etc. and
can be tied to an enterprise wide system that enables a business to see all of
their activities and plan accordingly and save on extensive paper work and
effort.

Managerial activities of those activities that are from external nature such as,
(providing services to customers, interacting with the suppliers and business
partners).

2.6. Advantages of information technology to businesses and its employees

IT plays a very crucial role in an organizations structures, strategies and processes. IT
has allowed Businesses to work more efficiently and maximize productivity.
Computerized systems are widely used hence it is advantageous to incorporate IT into an
organization. It has allowed organizations to connect functions that were once
disconnected to be connected and bridge the distance between geographical areas and
break the division between management levels.

IT creates electronic storage systems that protect the companys valuable assets. Storage
systems keep information safe by allowing certain rights such as access, delete, update
and add to only certain employees in the company. Securing, maintaining of customer
files are vital to Business integrity (Graziadio Business Report, n.d).

IT is not just beneficial to the business; it can also be beneficial to those that work in it as
it provides them the ability for these, to conduct their work activates from home or on the
road accessing the companys electronic network (Burke 2012). This makes it easy for
people to increase their productivity and also cuts costs on behalf of both the company
and the employee that is no renting office space and also no fuel, transport costs. A
November 2000 newsletter published by the Federal Reserve Bank of San Francisco
explains that IT improves a companys efficiency developing automated processes to take
burden off staff members.

In the modern information age, with the advent of the internet, it has become a powerful
tool for businesses in order to add value to their processes and create profit, it has
provided for ways and different avenues where businesses can expose themselves to their
customer, for example, internet provides such and avenue where by businesses can
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advertising their services or products by creating their own website etc., this website
could also be used as a point of sale, whereby customers can acquire the services and
products on a particular business in a convenient way, on the comfort of their home,
through the internet.

Furthermore there are the social networks that are very popular in our days and are
increasingly being used by businesses to create an online presence and therefore connect
with their customers and potential customers, they provide the business with a source of
advertisement and a communication channel with their customers as well as access to
instinct into what people consume etc. as they share their preferences on their networks in
the social networking sites.

2.7. Disadvantages of Information technology (dilip, n.d)

As mentioned above, there are many advantages to Information and technology to
businesses, but as it becomes widely implemented, it is imperial to address that its not all
great, there also some disadvantages to the use of information systems. Implementation
and operational costs

The implementation of IT systems can be costly to the whoever is implementing them,
business are sometimes required to pay a license to vendors to use a particular system and
in many cases they are required to pay that license for every of their employees assigned
to work with those particular systems another point on implementation cost is the fact that
for this systems to be implemented, the business requires to train the workers or
employees that are assigned to work on them and so training costs have to be taken into
mind when deciding to implement a particular information and technology system.

Eliminating jobs for Humans

Information and technology helps a great deal in speeding tasks and carrying them
out more effectively, as activities are automated and require less and less human
interaction.
This in turn creates a problem, whereby machines replace humans and so people
lose their jobs, the enterprise loses their certain loyal employees that contribute
greatly to the business as well as eliminating specialized jobs, this also affects the
business in a way that, it loses the human feel and many customers still appreciate
the human touch in the services they would like to acquire.

Security issues

Information and technology systems are vulnerable to security breaches, the fact
that they are still operated by humans, they run the risk of been breached by the
people working on them and sensitive information of a business can leave the
secure walls of the enterprise and to the outside world and can be used by anyone
anyhow.

The fact that many businesses are now connecting their systems on to the internet
also offers the possibility for security breaches as there are individuals out there
14

that make their life careers form braking into company businesses and rob or
render them un-operable and subsequently cause loses to the businesses.




2.8. How Information technology help a business to be more productive

Information technology is transforming the way the business world work. It allows
business conduct their activities in a faster and leaner manner with smarter, more capable
employees. Business and the workers employed by it are more productive than ever
before because of the tool information technology allows them to have (Daniels, 2012).

A business that utilizes information technology in an effective manner is capable of being
more productive, information and technology allows businesses to have make more
accurate sales projection and better control of its inventory, this in turn helps the company
to spend less as it does not require to hold on to inventory that is not required, as well as
keep track of inventory losses to such problems as mismanagement and theft, which
allows a company to reduce costs and perform better (Daniels, 2012)

2.9.Advantages and disadvantages of Information Technology in decision making (Vogt,
n.d)

Information Technology can help in decisions that human mind over look. These
decisions may include future v profit numbers which may determine which offices should
remain in operation or close down.

Information and technology can lead to faster decision making, it allows for computers to
make better decisions that that managers or office workers may deem unnecessary for a
human to make. (Vogt, n.d).

Computers can process more work and quickly which humans cannot do. People at work
can get bored or and get tired unlike computers that operate 24 hours non-stop and not get
bored or tired. Computers give more accurate than people, hence these precise results
lead to better decision making.

There is software that helps in decision making matters, examples of these software is
Enterprise Resource Planning (ERP) provides information to lower-level managers to
make decisions without consulting high-level managers.

New Research from Professor Raffaella Sadun, 2010, finds that the answer to decision
making between top, middle and low level managers is through the technology that a
company uses. Computer-Assisted Design and Computer-Assisted Manufacturing
software creates a situation in which the plant worker needs less access to superiors in
order to make a decision.
15


There disadvantages also associated with technology making decisions, a good equipped
computer comes with a high cost, there could also be need for programs that the company
will need in decision making, the programmers who write these programs dont come
cheap. There is also a possibility that by the time the computer program is in place
technology will have changed/ advanced since technology is always changed and the
company will be in need of another type of technology.

Technology has discouraged employee morale, since most work is being done by
computers then managers feel like their decision making skills are being under mind.
Computers are rational while people are subjective, hence using computer rational in
decision making and leaving out the peoples subjectivity may leave out crucial ideas in
decision making process.

2.10. Advantages of using Information Technology for Employment

Much as Information Technology comes with its own problems such as security
vulnerabilities, technology has made the employment process quicker, effective and more
efficient.

Technologies have helped companies during the recruitment process. Companies have
websites where job seekers can go and look for careers and apply online. Companies can
then look through the submitted resumes and choose those applications that have
matching skills then contact the applicants for interviews. This has saved waste of time
for face to face interviews that are not productive and fruitful.

Technology has benefited both the employer and employee. Back in the days in the car
manufacturing industry, mechanical assembling was done by human labour. Currently all
the hard labour in the car manufacturing industry is being done by robots while the
human labour does monitoring. This has made the human labour suffer less body injury
from the hard labour.

Gary Shapiro, 2011, suggests that technological innovation helps create new jobs,
markets and industries that never existed before.

2.11. Advantages and disadvantages of Innovative Information Technology (Joseph,
n.d)

Information technology advances every day hence this pushes businesses to implement
the latest technology so as to be able to compete with rival businesses. Small businesses
get both advantages and disadvantages from acquiring innovative technology.

Market expansion
16


IT can helped small businesses expand through the use of the internet; and allow small or
not so small business to compete worldwide, businesses can run online businesses, sell
their products and services around the world, through the use of the internet and
maintaining an online presence.
Cutting costs

Allows for cost cutting as many of the work activities, can be done by automated systems
that could in perform better and quicker than human labour. Example instead of having a
receptionist answering calls, automated systems is made to answer calls hence cutting
down on employee salaries.


2.12. Methodologies and Data analysis techniques for Measuring IT value

One technique for measuring IT value to the business is the Information Technology
Capability Maturity frame work (IT CMF) (Curley, 2006).

This model suggests that when making investment decisions concerning IT, businesses
and its IT organization require carrying out repeated processes that describe the practices
that be used to manage IT and maximize it to produce business value.

The CMF views IT as a production function, the money put into IT investment, is
considered as input and any products gained are considered as being the output.

2.13. Conclusion

After careful analysis of all the literature available on the topic of The Value of
Information Technology to Business Activities it is true to say IT does provide Business
value.

The literature also presents other aspects of the Business that should be well implemented
so as to gain value from the implementation of IT such as employment of well skilled and
experienced Chief Information Officer (CIO).

However, it is also important to note that IT is not panacea for resolving all business
problems and the IT department should be looked at as any other department in the
organization.






17

CHAPTER 3
RESEARCH METHODOLOGY


3 Introduction

There are many methods that can be used to collect data and information when conducting
research and it is important that methods are effective in gathering information that is reliable
and are used to provide answers to the research questions.

3.1. Research Methods

Research Method is a strategy of investigation, which moves from the original assumptions to
research design, and data collection (Myers, 2009).

There are many types of research methods, but for the aim of this research project, this study
will focus on the most common, research methods, which are: Qualitative research and
quantitative research methods.

3.1.1. Qualitative research

It is the study of things in their natural environment, with the goal of making sense of, or to
understand, phenomena in terms of the meaning people bring to them (Denzin, 1994).

It concerns with none statistical methods of investigation and analysis of social behaviour, it
makes use of data collection methods such as: interviews, observations, and case studies

I. Advantage of qualitative research (James P. Key, 1997)

The information produced by Qualitative research methods, are more in-depth
and wide-ranging.

Qualitative research methods make uses subjective information and it involves
the observation of participants, in order to describe the context, or natural
setting, of the variables being analysed, and how different variables interact in
the same context. This helps in developing a wide and better understanding of
the entire situation.

The data collect is subject to less restriction or assumption.

It is useful in conducting exploratory research and hypothesis generation as it
subject to fewer assumptions.
18


Does not need a strict design plan before it begins.

Allows for the study of individuals in more depth

Gives the opportunity for the participants to be free and be able to provide
data in their own words and in their own way.

Focuses on small groups.

It focuses on discovering more about peoples experience.

II. Disadvantage of Qualitative research (James P. Key, 1997)

It is difficult to detect or prevent a researchers bias opinion.

Its scope is limited due to the fact that its data gathering methods are required to
be carried out widely and in an in-depth form.

Being that it is subjective in nature, it becomes difficult to determine if the
approach and information gathered can be reliable and validated.

Since it has a focus in discovering about select group of people experiences, it
cant necessarily be used as a way to make assumptions about people outside of
this selected group of people.

Lack of ways to collect statistical data if it is necessary and so requires the
researcher to adopt a mixed methods approach of research whereby qualitative
methods and used in conjunction with quantitative methods in order to overcome
this problem.

2. Quantitative research

Quantitative research is a research method that has the aim, of determining the
relationship between a certain object (independent variable) and another (dependent
variable) in a population (Will G Hopkins, 1998).

Quantitative research is a method of research that involves analysing of data in statistical
or numeric forms (Hughes, 2006), as its name entails it aims to quantify data.

19


I. Advantages of Quantitative research (Shuttleworth, 2008)
Allows for analysis and measurement of data.
Provides the ability to study or analyze the relationship between an
independent and dependent variable in detail
Serves as an excellent way of finalizing results and demonstrating or refuting
a hypothesis.
When properly carried on, data collect and results are real and unbiased.

II. Disadvantage of Qualitative research (Jones, n.d)

Requires allot of time to be performed

Expensive to carry out.

context of the study or experiment is ignored

Unlike Qualitative methods, Quantitative research does not study things in a
natural environment or neither does it discuss the meaning things have for
different people.

It requires a large sample of the population to be studied in order to produce a
more statistically accurate the results.

11. Difference between qualitative and Quantitative research (Donna Roberts, 2012)
(John D. Anderson, 2006).

Quantitative Research Method Qualitative Research Method
Deal with numbers, with the aim to quantify
data.
Deals with descriptions, with the aim of
making sense peoples feeling to a particular
object.
20

Concerned with data that can be measured. Data collected through it cannot be measured,
but can be observed.
Establishes relationships between measured
variables
Understanding a social situation from
participants perspective.
Hard science Soft science
Attempts to generalization, which
subsequently leads to prediction, explanation,
and understanding

Attempts to develop unique patterns and
theories.
This unique patterns and theories help in
understanding highly controlled settings as
well those that are experimental in nature.

The literature review is done early in the
study.
The literature review can be done as the study
progresses or afterwards.
Sample size is limited to the selected research
population: Sample size n
There are no restrictions to the size of the
Sample size; seeks "informal rich"

Uses instruments Uses communications and observation

The researcher is separate Researcher is part
of process.
Researcher is separate Researcher is part of
process
The researcher is separate from the whole
research process.
The researcher is part of the research process.
Objective in approach, as its aim is to
establish concrete measurements and analysis
of target concepts to answer the research
problem.
Subjective in approach, as its main aim is to
establish a better understanding of human
behavior.

3.1 Sample population

These are the research participants, people selected to represent the target population to
be used as research subjects.

It is a feasibly impossible task for a researcher to study the whole world population and
so a selected group of that population that meet the sampling criteria of the research
project is selected, in this case individual or companies that utilize IT as means of
improving their companies or organizations activities and subsequently provide value.
21

3.2 Data Collection Techniques

There are many tools and techniques that can be used in order to carry out a research
work in order to gather data, for the purpose of this research, the data collection tools to
be used will be: questioners, interviews, and online surveys.

I. Questionnaires

A questionnaire is a list or series of questions and other prompts used in research
so as to collect information from participants.

Questionnaires will be given to people in the industry as to provide feedback on
the topic of business value of Information technology. These questions will help
provide me with what the peoples views, opinions and feelings about the use of
Information Technology in everyday Business operations.

II. Interviews

An interview is used to collect information as well as gain knowledge from
individuals.

Kvale, 1996, regarded interviews as a setting, whereby two individuals trade-off
views on a topic of mutual interest.

Interviews will schedule one on one so to listen and watch the respondent. This is
a much better way to collect data because one gets to see the body language and
expression of the respondent which also conveys a message as well as the
respondents verbal words.

III. Online surveys

Online surveys or questionnaires will be sent online to people who work with
Information Technology in their business operations. This will be less time
22

consuming because the questions will be straight to the point and should take a
few minutes. Hence the respondent will not bored by long questions.

3.2 Reliability and validity

Reliability and Validity are fundamental basics to scientific methods, and together; they
are two essential principals relating to what is accepted as scientific proof, by scientist
and philosopher a like (Shuttleworth, 2008).

Reliability means that any significant result obtained in a research must be able to be
repeated and not be a one-off finding. A researcher must be able to carry out the same
experiment at under the same condition and still be able to obtain the same results; this
serves to reinforce the findings and makes it acceptable to the wider scientific community
(Shuttleworth, 2008).This is a way of establishing the research hypothesis as an accepted
scientific truth; if a research work cannot be replicated then it does not fulfil all the
requirements of testability

Validity establishes whether the results attained through the research project have been
obtained through the correct procedures.

3.3 Delimitation

This research will be conducted in a mixed form, combining the use of a qualitative and
quantitative methodological approach.

Questionnaires will be set and sent out to individuals and business entities this will serve
to find out their opinions, attitudes and behaviour regarding their use of Information
systems in the day to day running of their businesses, a form of primary data collection
that makes usage of data that has not been published.

Simple random sampling will be used to get a group to represent a companys ideas and
opinions. Using those techniques we will then be able to find out how valuable is IT for
those people and the effective running of their business.

Online surveys and opinion polls will be prepared and sent out to individuals, with the
purpose of attaining the same results as the previous mentioned techniques.



23

3.4 Conclusion

This chapter focused on the methods to collect data and information for this research.
These methods will help with findings of Business value of Information Technology in
this research which will be provided later in the project.




























24

CHAPTER4
RESULTS AND FIDINGS

4. Introduction

This chapter documents the findings gathered from the value of Information Technology
to business activities. Surveys and online polls were emailed as well as posted on popular
social network works such as Facebook and Twitter, in order to gather the views of
participants with regards to the given research problem.

4.2. Demographic Study

This is the population sample that participated in the survey in terms of gender.

Gender Number of participants percentage
Male 21 68 %
Female 10 32 %
Total: 31 people

4.2. Questionnaire

Two questionnaires were sent out to individuals, one questionnaire was made up of
closed-ended questions whereby a participant was required to choose their answers to the
question from a set of given answers.




25

4.2.1. Closed Ended Questionnaire

This questionnaire was sent to people that use Information Technology in their daily
activities at work. These included IT personnel as well as non- IT personnel such as
secretaries, receptionist that work with Information systems to carry out their daily duties.

The following were the questions asked:

Question 1
Does the organization where you work conduct their business activities with the aid of
Information Technology?

31 participants took part in the survey and as
shown on the chart below. 87% said yes the
organisations they work for conduct their
business with the aid of Information Technology
while 10% said sometimes the organizations do
and 3 % said the organizations they work for do
not use Information Technology. The results
gathered indicated that many businesses are
computerised and see computer as a tool helpful
in the conducting of their activities.

Question 2

Do Information Systems provide any benefit to your activities?

Technology tools only useful if they provide
benefits to its users and the organisation. This
applies to Information Technology; its value is
measured by both the tangible and the
intangible benefits it provides.

26

From the responses gathered, it is clear that people see Information Technology as a tool that
provides benefits to the activities they carry out as 94% of the participants said yes.
Information Systems provide benefit to the organization activities while only a small
percentage, 6% said Information Systems do not provide any benefits to their activities.

Questions 3

Is there an importance to using Information Technology in an organization?

68% of the participants responded that
Information Technology is very important in the
organization while 29% responded that
Information technology is just important and the
remaining 3% responded saying information
technology is not important.



Question 4

How important is information technology in the globalized market?

77% of the participants responded Information
Technology is very important in the globalized
market while 19% say Information Technology is
just important and 3% saying it is not important.





27

Question 5
Do you believe it is important for companies to train their employees and provide them
with Information Technology knowledge?

68% of the participants believe that its very
important for companies to train employees
and provide information technology
knowledge while 29% believe that it is
important and 3% believe it is not so
important.


Question 6
Has your organizations security been breached through Information Technology
security flaw or fraud?
One disadvantage of Information Technology
could be that it puts an organization and its
assets in dangerous positions that they could
not be exposed to if they did not utilize
Information Systems.
The purpose of this question is to find out the
wide spreads of these security breaches, with
the purpose of finding out if Information
Technology is indeed putting organizations
operations in danger.
In responding to this question, 61% of the participants answered yes, their organization
security has been breached through Information Technology fraud while 39% of the
participants organization security have not been breached.
28

Although in the previous questions participants indicated that Information Technology is
useful, it should be implemented with caution and security measures in the organization so
that it does provide security loopholes to the organisation IT systems.

Question 7

What was the impact of this breach to your Organization?

61% of the participants said there have not been
breach impacts in their organizations while 32% of
participants organizations have badly been impacted
by the breach caused by Information Technology
security fraud and 2% faced severe impact of breach
due information technology security flaw.


Question 8

Does Information Technology provide your Organization with competitive advantage?

The aim of this question was to find out if
Information Technology can provide an
organization with competitive edge over those
that do not use Information Technology. 90% of
the participants strongly agree that Information
Technology provide competitive advantage but
6% do not believe that it can while 3% do not
find the question applicable.




29

Question 9

Is there a need for Information Technology in business activities?

94% participants believe that Information
Technology is needed in business while 6%
disagree.





Question 11

Can Information Technology effectively replace human labour and in turn do a better
job?

19% answered yes that Information Technology
can effectively replace human labour, 23%
answered no while 23% responded that only
sometimes that it is possible and 35% believe
that though there is Information Technology,
human labour will always be needed.



4.3. Open Ended Questions

This questioner was distributed to specifically IT personnel and these included all employees
in the IT field from managers to interns and graduates.




30

1. What is the value of information technology in your company?

Response: Participants responded with consensus that Information Technology holds a
lot of value to their companies and is a necessary part of a companys business as it helps
them to be more productive and to conduct activities that could not otherwise be done
without Information and technology, but some do point that many of the IT benefits are
not tangible, value that cannot be quantified.

2. Does information technology create advantage for a business
organization? And if so, how does it do it?

Response: Participants have indicated that IT offers some competitive advantage to an
organization, but it is not always advantageous unless it is a new technological
advancement. IT can only provide advantage if an IT tool is innovative and is not being
used by any other of the competitors or it is used a way that it is optimized that is not
done in the industry and it creates value to the organization.

3. How does information technology improve workers productivity?

Response: Respondents believe that in many cases Information Technology can speed
the delivery of services. This increases productivity in a short space of time. It also helps
in simplifying processes etc. But it is dependent on how workers utilize these tools, IT
alone cannot improve productivity.


4. How do information technology systems help an organization
improve customer service and reduce costs?

Response: Participants responded that there a lot of Information Technology systems that
have been put in place to provide convenient services to customers and in return these
systems have helped organizations cut down on human labour hence cutting down costs.
Systems such as Enterprise Resource Planning (ERP) provide competitive advantage to
organizations with services like online banking, online purchasing of good and services.
31

This has reduced travelling costs, queuing time on the customer side and no need of
hiring a middle man.

5. To what extent has Information technology taken over the activities that were
primarily done by human labour?

Response: Participants indicated that Information technology has taken over the labour
market. Most activities that were initially done by human labour are now done by IT
systems.

4.3. Conclusion

This chapter presented the data that was collected from the participants in form of online
polls and questionnaire. The information then presented on charts to provide a conceptual
over of the research. The data gathered is also presented in questionnaire to provide a
detailed analysis and views about the Value of IT in Business Activities. Further detailed
analysis will be provided in the next chapter.
















32

CHAPTER 5
CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter concludes the research that has been conducted on The Value of Information
Technology to Business Activities. The chapter also presents remarks and
recommendations.
From the data collected from participants who took part in the research, the data was then
analysed and the results were documented in the previous chapter.

5.2 Conclusion

Businesses have to a large extend adapted the use of Information Technology into their
everyday business activities. People have embraced the Information Technology
revolution through acquiring Information Technology qualifications and even the semi-
skilled people such as receptionists have acquired at least some computer literacy
certificates to help them do their daily work such as data capturing, appointment,
bookings and many more.
Information Technology has taken over the activities that were previously done by human
labour and businesses have embraced this change. This change has not only benefited the
companies but also customers as well.

5.2.1 Reliability

Unlike human labour, Information technology provides reliable and consistent results.
Garbage in garbage out a common adage in the computer world. So if a user puts in
correct data they will definitely get out correct results and the opposite is true.

IT systems can operate throughout the whole year without any down times. This is not the
case with human beings as they require breaks during the course of their duties.
33

Therefore, IT allows organisations to provide services throughout the operation of the
business.

5.2.2 Competitive Edge

This is done through the introduction of new ways to outperform their rivals. These
could be online services that are not offered by rival companies and or products that are
not produced by rival companies or more advanced products and services.

5.2.3 New Businesses Opportunities

E-commerce and E-business has become a business venture for a lot of people. Thanks to
Information Technology there is use of services like internet that has removed boarder
boundaries. Products and services can be bought from anywhere around the world
without need to travel and meet people face-to-face.

5.3 Recommendation

Although a specific model was not used in order to conduct this research, the
observations are based on subjective decisions provided by subgroup of participants in
question. Therefore, the results and conclusions reached through this research may
provide partial reality of the research in question - The Value of IT to Business Activities.

The rise of Information Technology use in business environment indicates that such
businesses are more competitive and have greater market share compared to others. It is
therefore recommended that companies should invest more in IT systems as part of
revenue generating strategy that will in turn add value to the business.

Based on the number of participants that took part in this survey, it is suggested there is a
need to conduct further research on a large population. This will allow the author to
develop a greater understanding on The Value of IT on Business Activities.


34

ANNEXS


ANNEX A: QUESTIONNAIR




9 Agulhas,
BedIord Gardens
2007


TO WHOM IT MAY CONCERN

Dear Sir/Madam,

I, Kyasimre Fiona, BTech Degree Student at Vaal University of Technology, would like to
humbly invite you to participate in my research project titled: The Value of Information
Technology in Business Activities.
You are requested to participate in this project by filling the attached questionnaire. This
study will need you to be free and open in answering questions. Your anonymity and
confidentiality will be highly ensured.
Your participation in this research will be highly appreciated.

Yours sincere,
________________________
+aPLOWRQ6HWHQGH


35

questionnaire

Procedure
Please answer as many questions as you can. This will allow the researcher to obtain
accurate results.
Confidentiality
You are voluntarily requested to participate in this research and the information provided will
remain confidential and only be used for the research purpose only.
DIRECTIONS
Please put a cross (x) in the box that best answers the question.

SECTION A: BACKGROUND INFORMATION

1. Please indicate your gender.
Male Female

2. Please, indicate your age
Below 18 18 31
31-40 41 and Above
3. Please, indicate your level of education.
Some Formal Education Educated

Other, please specify: .........................................................




36

Section B: Questionnaire (Closed ended questions)
Question 1

Does the Organization where you Work conduct their business with the aid of information
technology?

Yes
No
Sometimes


Question 2

Do these information systems provide any benefit to your activities?

Yes
No
Sometimes


Question 3

Is there an importance to using information and technology in an organization?

Very important
Important
Not so important

Question 4

How important is information technology in the globalized market?

Very important
Important
Not so important


Question 5

Do you believe it is important for companies to train their employees and provide them with
information technology knowledge?
37


Very important
Important
Not so important

Question 6

Has your Organization security been breached through information and technology security
flaw or Fraud?

Yes
No

Question 7

What was the impact of this breach to your Organization?

Severe
Bad
None

Question 8

Does Information Technology provide your Organization with competitive advantage?

Yes
No
Not Applicable


Question 9

Is there a need for information and technology in Business?

Yes
No

Question 10

Does information and technology improve effectiveness and efficiency?

38

Yes
No
Not Applicable

Question 11

Can information and technology effectively replace human labour and in turn do a better job?

Yes
No
Only in a few activities
There will always be a need for a Human touch
Not Applicable



SECTION C: GENERAL QUESTIONS (open ended questions)


1. What is the value of information technology in your company?
----------------------------------------------------------------------------

2. Does information technology create advantage for a business
organization? And if so, how does it do it?
---------------------------------------------------------------------------
3. How does information technology improve workers productivity?
-----------------------------------------------------------------------------
4. . How do information technology systems help an organization
improve customer service and reduce costs?
--------------------------------------------------------------------------------------
5. To what extent has Information technology taken over the activities that were
primarily done by human labour?
---------------------------------------------------------------------------------------



39

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