Impact of Information Technology in Organizations Effectiveness

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Table of Contents

Introduction
Background
Literature Review
Discussion
Conclusion
Works Cited

Introduction

Information technology is a general term that refers to any hardware or software that is used directly in the production process. It alters the process of production, storage, communication or dissemination of information (Aksoy and DeNardis 8). Information technology has become a major component in the organization’s production process. Its impact on the production process cannot, therefore, be overlooked.

Investing in Information Technology is expensive, and organizations need to be prepared to spend a lot of money. There have been arguments as to whether it is worth to invest heavily information technology. Concerns have been raised on the impact of information technology on organizational performance.

Organizational performance is defined as the accumulated result of organizational activities (Daft and Marcic 9). This paper seeks to investigate the impact of information technology on the results of organizational processes or results of the organizational performance.

Background

Information technology enhances the communication process in an organization. This makes communication across the organization much more effective and accurate. As a result, high performance is achieved in an organization. Improving the communication process is a major step in ensuring that the organization makes accurate decisions.

Another sector that has greatly changed as a result of information technology is the financial sector. The sector has experienced landmark changes such as automation of the financial systems. This ensures higher efficiency in the financial sector. The losses that are experienced as a result of using the manual system are also reduced.

Information technology is also believed to have a major impact on the cost of production in an organization. It has resulted in a reduction of the number of employees in an organization. Introduction of machines and other software has made work easier. Therefore, organizations do not require a lot of people to do various tasks. For example, automation of the accounting system reduces the number of people who would be computing and recording entries.

Reduction of manpower implies a reduction of the cost of production. Another way in which information technology has reduced the cost of production is making the process of production easier and more effective (Khosrowpour 21). The machines have also led to speeding up the process of production. As a result, an organization is able to save on time and money.

Information technology is believed to have an impact on the systems of an organization. However, it is important to analyze its impact in the organizational performance that can be measured by analyzing changes in companies’ income or profit. This research paper seeks to establish whether there is any change of a company’s performance as a result of embracing new technology.

Literature Review

Information technology and organizational performance have been of great interest to different researchers. There are a lot of research works that have been carried out to investigate the contribution of information technology in organizations. Though extensive research work has been carried out on this area only, little work has been done focusing on the impact of information technology on the organizational performance. With the world experiencing landmark changes in the information technology sector, it is important to understand the impact it has on organizational performance. Some of the notable research works that have been carried out in this area are discussed below.

Impact Of Information Technology On Organizational Performance: An Analysis Of Quantitative Performance Indicators Of Pakistan’s Banking And Manufacturing Companies

This research work was carried out by Muhammad Shaukat and Muhammad Zafarullah. The paper seeks to establish the impact of information technology on the banking and manufacturing sector of Pakistan. The paper not only seeks to establish the impact of information technology on the entire organization process but also seeks to analyze its impact on the overall performance.

The researchers carried out an extensive research on 48 companies. 24 of the companies were from the manufacturing sectors, and 24 from the banking sector. In their research, they analyzed the impact both on the local and foreign firms. 12 of the banks interviewed were foreign banks, and 12 manufacturing firms were foreign.

In the research, they used regression to analyze the data. The income of the organization was used as a parameter to measure any change in the performance which was realized after using new technology. The paper analyzed the total net income in comparison to the cost of IT employees (Shaukat and Zafarullah1-13).

Results showed that there was a significant impact of information technology on all foreign banks in Pakistan. It was also clear that there was an increase in the number of IT employees in all foreign banks. There was also an overall increase in the total number of employees in the foreign banks.

The research also found out that there was an increase in the local banks. The increase was as a result of adopting new technology. The regression results were positive, indicating that any increase in information technology investment resulted into an increase in the income of the bank.

It was also found out that there was a decrease in the number of employees in the local banks. However, it was established that the decrease was not a result of investment in IT, but due to privatization of banks that took place during the research period. The research showed that investing in information technology resulted into an increase in the income of all banks, both local and foreign (Shaukat and Zafarullah 1-13).

The research also found out that investing in information technology had a great impact on the income of the local manufacturing companies. There is also a decrease in the number of employees because most of the companies outsourced IT experts from different companies.

Investing in IT did not have a substantial impact on the income of foreign companies. Most of the companies investigated showed that IT did not have any positive impacts on the income of these companies. To sum up, information technology did not have an impact on all manufacturing companies. Some of the companies investigated recorded no change in income after investing in information technology.

Thus, the research found out that information technology had a big impact on both the manufacturing and banking sector of Pakistan. Both sectors recorded a positive regression coefficient, indicating that investing in information technology has an impact on the income of the organization; hence the performance of the company.

The Impact of Technology on Organizational Performance: Improvement in Productivity Is Due Not Only To Technology, But Also to how it is Integrated Into The Organization

The research work was carried out by Yves Gagnon and Jocelyne Dragon. The research paper investigates the impact of technology on the organizational performance. The paper seeks to investigate the role of technology in the organizational performance, and whether information technology is enough to have a positive impact on an organization.

The researchers found out that information technology had a big impact on organizational performance but it was important to blend it with a good organizational structure. The paper outlines that information technology alone will have minimal impact on the performance of an organization, but once it has been combined with a good organizational structure, the results were admirable (Gagnon and Dragon 19-31).

Information Technology and Business Value in Developing Economies

The research work was carried out by Acklesh Prasad. The research was meant to find out the role of IT and how it contributes to business value. The paper investigated the contribution of IT in broader terms. The research paper covers the contribution of IT in the developing countries. The paper concentrated more on the intangible benefits of IT investments.

The research found out that there was a great impact of IT investment and it resulted into great benefits that contributed to business value. The paper found out that there were so many intangible benefits that resulted from IT investment. The research concludes that investment in IT contributes to intangible benefits and improves organizational value (Prasad 1-11).

Information Technology and Organizational Performance: An Integrative Model of IT Business Value

The research work was carried out by Nigel Melville, who is an associate professor of information systems. The research paper seeks to establish the interrelationship between information technology and organizational performance (Melville 1-11).

The research indicated that information technology plays an important role in an organization. However, there are other factors, such as organization’s resources and macro economic environment, which determine the impact of IT on the organization (Melville 1-11).

Research Findings

The research was carried out to investigate the impact of information technology on organization performance. The findings are based on secondary data, which was collected from the company’s website.

Impact of Technology on British American Tobacco

British American Tobacco is one of the largest companies in the Tobacco industry, producing more than 50 brands of tobacco. The company employs approximately 55,000 people, and serves more than 55 markets. Handling the company’s data was tiresome and involved a lot of work. The company adopted new technology, which revolutionized its operations.

The company had a problem with its database, which spilled all over the world. Microsoft proposed a strategy that allowed to cut down the replication task from 400,000 to 22,000. This increased the performance of the company because of having well managed data (Cisco 1-11).

The company has also employed the use of DSS application in sales and marketing. The DSS model helps in sales forecasting, pricing, advertising and promotional campaigns. The company has also implemented the model for use in customer relationship management. The model helps in assessing the behavior of customers, such as customer’s patterns, customer’s rejection criteria, and assessing a potential customer. The operating system has helped to improve the company’s marketing program (Cisco 1-11).

The company has also adopted the use of information technology in its finance and accounting system. Currently, the company uses electronic data system to manage the company’s finances. This has automated the process, therefore, the operations run effectively. The data system helps the company’s manager in coming up with a mini budget as well as developing a short term strategic plan.

The human resource of the company manages data for more than 55000 workers. The department has also implemented a new information technology that manages all labor related issues such as labor contracts costs. The system helps to monitor the workers’ performance. The company’s managers are also able to compute the range and other statistical operations of the workers salaries. The information system provides up to date information on the workers’ profiles and performance.

Impact of Information Technology on Barclays Bank

Barclays bank is the seventh largest group in Europe. The company seeks to be among the world’s top five banks through implementation of new technology. The company manages over 115,000 employees in over 50 countries. The bank has embraced the use of technology in its operations, hence making it one of the best banks globally.

Barclays bank was the first bank to develop an ATM system in its operations. This helped the bank to serve its customers efficiently and quickly. The machines helped to reduce the number of queues in the bank. Investing in new technology led to an increase in the number of customers because of the increased efficiency of the bank. The bank also developed the Barclay’s card that made banking convenient (British American Tobacco 1-6).

Barclays bank developed an E-banking program with the aim to increase the number of internet sales by forty percent. This made the bank’s web page more attractive, which led to an increase in the number of customers. The web page also increased customer satisfaction. The number of web customers increased, hence making it a good investment (British American Tobacco 1-6).

Investing in information technology was a worthwhile venture for Barclays bank. The improvement of the company’s information technology led to the increase in the number of web customers. This led to an increase in the company’s revenue.

Discussion

Major progress has been made in the information technology sector. Different organizations have not been left behind in the use of information technology systems in their operations. The use of technology has had both positive and negative impacts on organizations.

From the research findings, it is clear that investing in information technology is a worthwhile venture. From the analysis of British American Tobacco Company, the results indicate that information technology had a major impact on the company’s performance. Automation of the operation system in the company resulted in the increased efficiency, hence increasing sales. Automation of the financial system of the company improved the efficiency of the finance department.

This reduced the cases of losses that were previously recorded. Use of the current financial system reduced the number of employees in the department. Therefore, the cost of production was reduced. The company has also embraced the use of technology in managing their human resource.

This has improved efficiency of operation as the managers can track the activities of their workers. The use of human resource operating system has also improved managers’ work because they are able to monitor the effectiveness of each worker and the level of training.

Barclays bank has also invested heavily in the information technology sector. This has helped to improve its efficiency and has made banking effective. The use of ATM has reduced the cases of queues in the banks. It also takes customers less time to withdraw their money.

Therefore, the process is effective. E-banking has also increased the number of web customers. Bank clients can bank and access other banking services through the internet. This has resulted in the increase of the company’s revenue because of the increase in the number of customers.

Conclusion

Information technology is an important component in any organization. It helps in making organizations’ operations more effective. Investing in information technology sector for any company is expensive, but the benefits obtained outnumber the costs. Organizations should seek to invest in this sector because this will reduce the cost of production and improve the company’s performance.

Works Cited

Aksoy, Pelin, and L. DeNardis. Information Technology in Theory, Stamford: Cengage Learning, 2007. Print.

British American Tobacco. Information systems of British America Tobacco in Bangladesh. web.

Cisco. Strategic E-Banking Refresh Prepares Barclays Bank for Next-Generation Web Technologies and Explosive Growth. web.

Daft, Richard, and D. Marcic. Understanding Management, Stamford: Cengage Learning, 2010. Print.

Gagnon, Yves-C and Dragon, Jocelyne. “The impact of technology on organizational performance”. The Journal of Public Sector Management. Vol. 28, No. 1 (19-31). Informaworld. Web.

Khosrowpour, Mehdi. Information Technology Management and Organizational Innovations: Proceedings of the 1996 Information Resources Association International Conference, New York: Idea Group Inc, 1996. Print.

Melville, Nigel, Kraemar Kenneth and Gurbaxani Vijay. Information Technology and Organizational Performance: An Integrative Model of IT Business Value, California: University of California, 2004. Print.

Prasad, Acklesh. Information technology and business value in developing economies: A study of intangible benefits of information technology in Fiji. California: University of California, 2008. Print.

Shaukat, Muhammad, and M. Zafarullah. “Impact of Information Technology on Organizational Performance: An analysis of Quantitative Performance Indicators of Pakistan’s Banking and Manufacturing Companies European.” Journal of Economics, Finance and Administrative Sciences 16.1 (2009): 1- 13. Web.

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