The Information Technology and Businesses

In a modern world, it can be seen that the information technology (IT) has a great
influence business activities. Most of the business activities such marketing, human
resource, sales, production and others has influence with the advancement of IT.
Nowadays human activities become easier with the present of the information
technology. Information technology involve the use of hardware, software, networking
and data resource management in which all these components will facilitate individual
and organiation to perform the work and activities effectively. Think back a few
decades ago, there is no internet, email, mobile marketing, telecommuting and smart
phone. !verything needs to be done manually in which this method become barrier for
the business to respond with competitive market. "owever, with the advancement in
information technology, everything has changed. The advancement in IT has made the
business no longer focusing on fulfill customer satisfaction but the business has
changed their focus on how to make customer delightful with product and services
provided by the business. Now with the information technology communications occur
immediately and instantaneous.
The use of IT allows large amounts of information pass through email and
internet at anytime and anywhere. Innovations in technology have enhanced
companies operations of all sies and facilitate the business to move from small local
businesses into global businesses (#manda, n.d) #ccording to $arrell (%&&'), they
suggest that the role of IT is to lead and drive the formulation of business strategy.
(ther than that, they agree IT can be seen as a tool to achieve growth and develop
sustains competitive advantage to the organiation in order to compete in highly
competitive market. Ingram (%&&)) stated that information technology is a new
phenomenon that give dramatically changed in the daily lives of individuals and
business in every part of the world. In addition, information technology has grown and
spread out through the business world. Information technology has give affect on how
companies market their products and also facilitate people to communicate and
accomplish their *ob in modern organiations. $rom day to day the changes in
information technology such software, hardware and other devices has continually
changing the face of business in almost every way (Ingram %&&)).
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The Information Technology and Business Improvement
, IT Helps to Reduce Cost of doing Business
Initial implementations of information technology in business almost always focus
on cost reduction, it is the benefit about IT that will come across in our mind as the first
ideas when talk about on how IT can help organiation to improve their businesses.
Most of the ob*ective of the businesses to implement the use of IT is to automate
processes in order to reduce cost by replacing large numbers of people with a few
computers ("arwell, %&&-). .educed e/pense in performing the businesses is one of
the reasons that most companies have already automated the obvious areas for
savings long ago. (rganiation that still operates their businesses manually will invest
high cost as compared to organiation that automated most of their operations. It is
because process or operation that done manually re0uire a large number of workers to
perform it if the work is complicated and involve a lot of process. (rganiation that use
a few number of workers to operate their business will involve high cost such payment
of the salary, cost of training to increase employee1s skills and ability, recruitment cost
to hired new employees and others related cost. #s compared with automated process
which the operation has been done by the machine or automated system such
computer are not involve high cost because computer not re0uired training to perform
the work, everything has been set up in the computer.
#ccording to (12rien and Marakas (%&&3), organiation can arise it cost savings
because of the application or process that use the information technology such internet
and internet,based technologies in which it seem less e/pensive to develop, maintain
and operate than traditional systems. 2esides for certain types of transactions, the
transaction cost savings are more to online transaction compared to traditional. $or
instance, (12rien and Marakas (%&&3) istated in their book in which airline booking is
about )& percent less if booking reservation has been done through online or internet as
compared the same booking reservation has been done over the telephone. It is same
with common online banking transaction such check payment, make payment that cost
from -& to )& percent less than traditional practices. Therefore if the business is still not
competitive because of a higher than normal e/pense level, then the aim to reduce the
%
e/pense or the cost can be the most important way that IT can contribute to the
business ("arwell, %&&-).
, IT Helps Business to Increase Customer Loyalty and Retention
4ustomer is a significance element for every business to e/ist. Most of the goal
and ob*ective of the business is to fulfill their customer needs to ensure that the
customers are satisfied with the product and services provided by the business. 5o it is
important for the organiation or business to create and maintain a good relationship
with the customers to ensure that the customer is loyal to their product and services and
at the same time will help the organiation to increase business profitability. The
businesses that focus on how to increase customer loyalty and retention need to
implement customer relationship management (4.M) strategy. #ccording to Ngai
(%&&-), 4.M ob*ective is to build the relationship in order to affect customer ac0uisition,
loyalty, retention and profitability.
The significance of information technology and its application in 4.M is in the
increased use of these technologies to establish and develop loyalty and retention
among e/isting customers. The effective use of 4.M system can facilitate organiation
to develop relationship,building activities and at the same time it will contribute to the
organiation profitability (6il*oen, 2ennett, 2erndt 7 8yl, %&&-). (rganiation and
businesses that use 4.M strategy are able to identified customers preference and
interest by the data and information that they retrieved from the 4.M system, thus it will
assist the organiation to create product or services that fulfill customer needs. 9aw,
9au 7 :ong (%&&') identified that 4.M as a process of storing and analying large
amounts of data that give organiation and businesses the view about customer
behavior. The data that has been analyed enables the businesses to treat customer
differently based on the e/hibited behavior. #non (%&&%) claimed that to build the
relationship with customers re0uires data on the customer. The data that has been use
must correct, complete, current and uni0ue to avoid the mistake in delivering the
product and services to the customer. There is some organiations are not ready for
4.M implementation because they do not have good enough data. # research
conducted in the ;< in %&&& identified that organiation that consist of update, clean
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and usable data it can be classified as an organiation or businesses that fully
implemented 4.M strategy (#bbott, %&&+).
, Information Technology Help Business to Perform in Effective and Efficient
Way
;sing IT will help organiation in do work in effective and efficient way. This is
because by using IT the tendency to do mistake can be reduce. $or e/ample the
redundancy of key in the data in database can be eliminated by using IT because it has
a uni0ue identity for each of data in database ((4., %&&)). Thatcher and (liver (%&&+)
said that by using IT the company can improve the 0uality of the business. This is
because IT will leads to creation of new products or new features on e/isting product
that will increase human desire to consume the product. (ther than that, IT also
improved the 0uality of medical care to patient such as diagnosis accuracy and
treatment strategies.
This will provide ability for the patients to obtain information about their sickness
in order for them to better manage their condition and lead to communicate with health
system that can also help in improve the efficiency and the 0uality of care. In some
point meaning that the health care provider can store, retrieve and transfer all
information about patient electronically that can save time and life of patient. #ll this
can be done with the help of IT in all aspect of process and system in an organiation
(Med=#4, %&&>).
The Institute of Medicine (I(M) in %&&& released a report which focusing on
patient safety saying that >>,&&& to )3,&&& of people die in ;.5 hospitals annually
because of the medical error and it involve error in medications, this happen because of
the system that is not effective and organie by the hospital (I(M, %&&+). Then after the
hospital adopt the 4=(! plans which link with IT, it improve the 0uality of system and
reducing the medication errors, decreasing the dosage errors and prescribing medicines
more precisely ((ren et al., %&&'). This can be said that by using IT, the management
of patient and medication is now more organie and effective that leads to great 0uality
offer to patient.
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The improvement of 0uality of information management with help of IT will lead to
the improvement of safety of patient in the area of health. This is because with the
great management of information, patient will get accurate information and medicine
about their sickness. !rror in giving medicines can be reduced. 2ar coding can
prevents errors at the patient1s bedside by prevent the administration from supply the
wrong drug when other level of review failed. (ren et al. (%&&') said that the use of bar
coding reduced ambulatory and impatient medication error and also reducing the
number of adverse drug events.
Information Technology and Business Innovation
Nowadays the use of information technology (IT) is no longer about supporting or
automating businesses but it is about innovating the businesses in order to gain
competitive advantage in the highly competitive market. #n organiation that is
consistently good at use IT to make newer and better product, services and business
practices able to gain a considerable advantage. Tarafdar and ?ordon (%&&@) said that
IT researchers and practitioners strongly believe that IT is tool of innovation. #s
businesses to be competitive advantage, it is important for them to have the value of
innovation. #ccording to ?iarratana and Marco (%&&>) identified that the primary drivers
of organiation growth and profitability is emphasiing on innovation.
#ccording to (!4A (+)3+), Binnovation consists of all aspect technical, scientific,
commercial and financial steps that necessary for the successful development and
marketing of new or enhance manufactured products, the commercial use of new or
improved processes or e0uipment or the introduction of a new approach to a social
service and .7A is only one of these steps that lead to innovation ideas.C It can be
seen that from the definition by (!4A (+)3+), innovation can be categoried into
product innovation and process innovation. =roduct innovation refers to the improved of
new product, service or e0uipment that is successful on the market. :hile process
innovation involves the adoption of a new or improved distribution and also
manufacturing process. "owever, #nahita, Dennifer and 5ally (%&&)) said that
innovation consist of different types of change that is depend on the resources that
organiation has, organiation capabilities, strategies and re0uirements. 4ommon
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types of innovation relate with a new products, new services, material, new processes
and new organiational forms. In order to ensure innovation take place in businesses,
the appropriate use of information technology as a significance elements for attaining a
competitive advantage over other businesses. Most of the leading firms successful in
implementing innovation because the present of information technology that enables
them to respond with the rapid changes in a modern world.
Innovation is closely related with business performance. The first view shows
that the production of new products or processes strengthens the competitive position of
businesses to its competitor. :hile the second view argues that the process of
innovation transforms a firm fundamentally by enhancing businesses internal
capabilities, making it more fle/ible and adaptable to market pressures than non,
innovating firms (Neely and "ii, +))3). =roduction of new product wills successful if the
businesses able to give innovation ideas to the new product by using the advancement
of information technology. $or instance, telecommunication businesses are competing
with each other in order to produce mobile phone with the high technology application
and function. 2asically, most of the telecommunication businesses produce the same
product to the customer which is mobile phone, but what make them different with other
rivals are the innovation ideas that take place in designing and creating new model of
smart phone. 2attle of smart phone innovation has take place in many feature, for
e/ample the innovation ideas of smart phone with the water resistant and dust proof
features (Matt, %&+>).
In order to create this features, telecommunication businesses need to ensure
that they have all the advance and update technology to enable them create smart
phone with the attractive features that will capture customer interest to get the product.
:ithout the present of advancement of information technology, the telecommunication
businesses are never able to compete among themselves. 2esides to add more on
features and attributes, other reason IT take place in product innovation of businesses
because to respond the change in customer re0uirement, to enhance convenience to
use in term of ergonomic consideration, increasing product sale ability, improving
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product reliability and most important thing is to gain competitive edge among
competitors.
(ther than product innovation, IT also gives affect in process innovation. #
process is combination of technologies, skills and facilities that are used to produce
product or provide services. =rocess usually involves a set of tasks that need to be
performed, a flow of material and information that connect the task and also storage of
material and information (6i*ay, %&+'). The process will transform input into output, thus
to get the valuable output organiation need to encourage process innovation to ensure
the output that has been produced will facilitate businesses to make a good business
decision.
$igure +F $low of process
#s refer to figure +, process will transform input into output. 2ased on the figure,
customer data one of the input that businesses may have. The customer data at input
stage is raw data, which is the data is not clean and organiation need to analyed the
data to get the accurate data base on the business process that businesses practices.
$or e/ample, if the businesses want to innovate a new approach in customer relation
management (4.M), the businesses must apply an advance technology in 4.M
strategy such e,4.M in which it will help organiation to get accurate and valuable
information as an output thus this information will influence businesses to make a good
business decision.
Information Technology and Business Reinvention
.einventing has become one of the important elements for the company to
upgrade their Information Technology (IT) aspect. This element will help to redesign the
company strategy and process in IT to suit with the environment and availability of
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technology that re0uired by customers and suppliers. $rom (/ford Aictionary, the
definition of reinvent is to present something in a new form or with a new image.
Meaning that, reinventing the IT is company need to restructure and redesign the
business process or system in line with the advance of technology and the needs of
customers.
$rom Madnick (+))'), today1s business is influence by the increasing of
geographic scope because of globaliation and competition, pressure of productivity
and the rapid change of environment. This will lead to company to restrict the flow of
company with the nowadays function in order to move along with the update. $or
e/ample, the top management may need to restructure the organiation from the
company which practices the centralie organiation where one department will do all
the function while others *ust wait for the report to the organiation which is more
specialie where each department will do its specific task and function and the
information will be e/change to other office through telecommunication and IT function.
2randauet. al. (+)))) said that there are three ma*or phases in changing the
application of ITG the initial phase, reengineering phase and reinvention phase. In the
case of ?T! Network 4ompany, each phase illustrate the way it connected both from
business and IT perspective. In the initial phase, IT will serve a business support
function, but it did not give significant effect to the business as whole. Ne/t is that IT
allowed the reengineering of the core business processes and finally IT enable the
company to reinventing the telecommunication business.
"ence, reinvention signifies the impact of new technology in order for company
to redefining the business, for telecommunication company it will include the emerging
of Internet applications and services where a lot of company nowadays have official
website that connect customer and employee through virtual ways. That is why
reinventing the telecommunication process will help in success to business (2randau et.
al., +)))). 2randau also said that IT should be the prime agent for the transformation of
company. .einvention also helps the company to overcome the competitive pressure,
competitive technologies and the mergers and divestitures of company. It also will
change the way company do its business, this is because of changes in IT and
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telecommunication will lead and force the company to follow and change the definition
of the business.
4ompany will normally do the reinvention in order to redesign its business
process with the need of customer and the availability of technology in the company.
.einventing meaning offering new process to the company and in order to do that, the
company has to combine old and new technology in the process which we call as the
integration of the technology. There are some characteristic of integration technology
which is the technology,enable, continuous rapid change and innovation, applies in all
functional areas and industries, it re0uires cross,functional perspective, infrastructure,
focused and force for enterprise,wide transformation (Madnick, +))'). The first
characteristic is the technology,enabled where the company is focusing on new
opportunity to be provided by new technology especially with more intelligent and easy,
to,use shared databases and communication networks. 5o Madnick (+))') said that in
order to do change the company must be well,versed in these new technologies.
Ne/t is the continuous rapid change and innovation of information,based
technologies which automobile and railroad also making change in technologies like the
information,based technologies such as portable computers, high,performance
communication networks and great database systems are now change in 0uick rate. 5o
if the company did not fully understand or know it e/istence then the company will face
great problem later on. This function must be adapt into the environment of business to
employee be able to understand the need and way to gain benefits from it. Then in
order to reinventing the business in IT the company must also redesign the change and
apply in in all functional areas. The change in IT must be communicate and used by all
department in the company so that the flow can be manage and run smoothly in all
department (Madnick, +))').
#fter that the company must focus on the infrastructure because it plays very
important aspect where the need for base capability in installing the new process and
system is important. It will make sure whether the system or process suit with the
company or not. If the company are focusing in the traditional information system then
the company had to change the way it do the business from traditional into the modern
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process in order to suit the infrastructure with the new system (Madnick, +))'). #s said
by Madnick (+))') the enterprise,wide transformation where the technologies will only
be effective if the system is appropriate with the organiation and vice versa. 5o in
order to make reinvention success the company must help the organiation to redefine
its goals and necessary changes must be done to attain the goals.
Conclusion
#s a conclusion, information technology (IT) is no longer about supporting or
automating a business but it is more than that. In the modern world and highly
competitive market, organiational leader need to look forward to encourage the use of
IT because it enable business growth and help businesses to gain competitive
advantage. Today, most of the business visions are changing due to high impact of IT.
IT assisted business to grow, reduce costs and increase return on investment. 2ased
on the study that has been conducted by IT practitioner believes that there is a lot
benefits derive from the use of IT in businesses. (ther than help organiation to
improve business productivity, IT also as key element for innovation and reinvention
take place in businesses. 4urrently, large companies focusing on establish research
teams and continuously innovating and reinventing their business models to attain
greater benefits of their business.
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