Importance of Technology in Organizations - Example

Running Head: Importance of Technology in Organizations Importance of Technology in Organizations Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 19, 08, 2013 Table of Contents 19, 08, 2013 1 Table of Contents 2 Importance of Technology in Organizations 4 Executive Summary 4 Introduction 4 Literature Review—Critical Analysis 5 Fig 1: Changing role in information technology in organizations. 7 Fig2: Forces in an organization driving strategic functioning importance of IT 8 Conclusion 14 Bibliography 16 Importance of Technology in Organizations 4 Executive Summary 4 Introduction 4 Literature Review—Critical Analysis 5 Fig 1: Changing role in information technology in organizations. 7 Fig2: Forces in an organization driving strategic functioning importance of IT 8 Conclusion 14 Bibliography 16 Importance of Technology in Organizations Executive Summary Technology is increasingly becoming a vital factor in supporting day-to-day activities in industries and organizations. “All organizations, it appears, must face the so-called information age head-on and prepare for a new world order.” (Joanne& John, 2006, pg.xi)Alignment of organizational and business processes proves useful in coordinating and supporting business activities. Acquisition and consequent successful implementation of IT in an organization depends on alignment of all aspects in an organization. In some organizations, implementation of IT fails due to improper acquisition and consequent failure of implementation. This calls for a wholesome involvement of all structures in an organization such as human resource (HR). HR plays a critical role in streamlining IT use in an organization. Introduction Technology is widely considered in most organizations as a fundamental aspect. The emergence of Information Technology has revolutionized how organizations do carry along with daily activities. “Technology is a resource that, like financial and human resources, is pervasively important in organizations.”(Burgelman, Christensen, Wheelwright, 2006, p.237) Today, Information Technology (IT) is widely comparable to human and financial resources. Some experts argue that IT is just as useful in the post-industrial age as capital was more useful in the industrial age. Management of information certainly determines the future and survival of an organization. Literature Review—Critical Analysis There are two key dimensions on which the role of IT is changing. First, IT is clearly shifting to strategic functioning unlike administrative and supportive function. IT is vital in generation of revenue and division of an organization. On the other hand, support functions in an organization include training, personnel, and travelling. This is more applicable in organizations where time is a critical factor such as banks and airports. “Obviously, the technological perspective on ICT is an important one as well. (Van, Lidwien, and Jan, 2005, p.17) Recent studies and surveys indicate that top ten companies in various industries had shifted IT from administrative functioning to a more of strategic functioning. This implementation has proved advantageous and profitable to many companies. Case examples are Citicorp and American Express companies. These companies have shied off competitors by shifting administrative functions to more integrated strategic functioning in IT. It is estimated that Citicorp spends $900 million annually of IT. This amount delves into software and research, computer hardware, software, and also development. On the other hand its rival, Bank of America spends about half this amount. In the case of American Express, the company implements artificial intelligence and database management in credit card verification. In the chemical and oil industry, DuPont is pumping millions of dollars into expert systems. This kind of technology mimics intelligent problem-solving techniques which is applicable in chemical processing. In addition, the company has also engaged in advanced computing in order to boost investment. DuPont acquired the Cray supercomputer that boosted research of products in pharmaceuticals. Secondly, IT is gaining attention and recognition from top management. In some organization, top management are role models and leading examples in embracing technology. Roger Smith, the CEO of General Motors great interest in the use and application of IT led to the acquisition of Hughes and EDS. Other companies have developed systems that directly report to the top management. For example, Sears Communication Network (SCN) reports directly to Edward Brennan, the chairman of Sears. In some companies such as Sears and Security Pacific bank, IT plays a vital role in the review and participation of long strategic planning in the organization. Attention from top management has yielded in the integration of telecommunications and data processing in the same organization. This shift has led to creation of offices such as Chief Information Officer (CIO). In this case, IT management has shifted from a decentralized system into a centralized system that is more manageable. The shift from administrative to support system and shift from decentralized to a centralized management can be summarized as shown below. Fig 1: Changing role in information technology in organizations. Technology as a Strategic Resource in organizations There are a number of factors contributing towards changing the role of IT in organizations (Eskelin, 2001). The following are ways which drive importance of application of integrated strategy in IT. Increasing competition: Competition is immensely forcing organizations shift into more efficient and effective ways of doing business. Immense competition forces organizations delve into application of IT in order to boost efficiency in service delivery. Technology revolution: The dependence of performance and service delivery towards technology greatly drive organizations implement new technologies (Peppard, 2003). In addition, implementation of technology in nearly all sectors greatly impacts shift into strategic functioning in IT. Globalization of business activities: Technology has sealed all geographical barriers in communication. Global dependence of business operation includes manufacturing, procurement, and marketing. This means companies are more interrelated to each other. Implementation of strategic functioning IT means more organizations can easily communicate and boost efficiency in business operations. Organizational changes: Acquisitions and managers in organizational structures mean top management should also remain flexible. This streams down in implementation of strategic functioning in organizations. This is in order to remain relevant in introduction of new technologies. Fig2: Forces in an organization driving strategic functioning importance of IT Below, we shall discuss how these four factors enhance strategic importance of IT in an organization. Increased competition Most industries are at their maturity stage especially in advanced countries. This results into immense competition between companies as they have nearly exhausted all growth cycles. Today, we are experiencing intense competition wars between industries in nearly all sectors. They include automobile, retailers, steel, metal, computing, and appliance industries. The use of technology enables an industry set a competitive edge over the others. The following are ways in which an industry can use technology in order to have a competitive edge over the others. First, application of technology reduces the cost of operations through automation of activities in both the factory and the office. A case example is in telephone companies that have computerized account management system which have significantly resulted in cost savings. Similarly, travelling agencies have increased savings through computerized travel reservations. Computerized guest reservations, accounting, and billing services have reduced operation costs of hotels and motels. Secondly, IT provides quality assurance with improved service and product quality. This enhances less error in each activity carried out. A case example is the scanner technology. It provides Universal Product Code (UPC) that serves as superior assurance in supermarkets and other retail stores. Third, IT creates differentiation in the value-added services. A case example is the Federal Express that informs its customers on the location of their goods in transit (Ward & Page, 2001). This is in addition to provide fundamental reliability and security of their goods on transit overnight. This is a competitive strategy that gives the company a competitive edge over the others. Lastly, IT can be implemented in competitive intelligence. American Airlines implements this type of technology in enhancing efficiency of operations in the airline. In this case, every airline deposits its fares and travelling schedule which enable American airlines adjust its fares and schedule competitively. Globalization of business activities This is a major force in strategic functioning of IT in organizations that foster efficient business activities. Virtually, all businesses correlate with each other at a global level whether high tech or low tech. This interdependence ranges from procurement of materials, products, and components to complex integrated global services. Global business operations require elimination and reduction of geographical and time barriers. Online and real-time communication is necessary so as to facilitate service delivery. In addition, control and coordination of human and financial resources is essential in initiating global business operations. It is a known that information and services products such as data networks, FAX, and private lines have rapidly grown around the world. Global mergers, acquisitions, and global competitions have magnified interdependence between triad markets such as Europe, Japan, and North America. Investment banking is a case example of global business operations(Lamb & Kling, 2001). This type of banking integrates a wide range of banking activities. These banks trade, borrow, and invest capital on a global basis. In addition, these banks virtually move financial factories all over the world on a daily basis. These banks are based in regions such as Europe, Japan, and the United States of America. This type of technology requires a highly reliable, centralized, and dedicated online and real-time integrated system. Experts widely believe that some stock markets are interdependent on one another and are based on a 24 hour trading system. It is also believed that the stock markets collapse in 1987 came as a result of lack of reliable on-line trading systems. This technology enables investors make decisions on a minute-by-minute basis unlike on a daily basis as the case prior to the implementation of online trading technologies. Airline and financial services greatly rely on online services. In the United States, most retail merchandise originates from offshore markets which require online and computerized entry systems. This is widely applicable in the trade of perishable products as flowers and fashion garments. Global rationalization of manufacturing factors has necessitated deployment of computer networks. This is as a result of international mergers which require coordination and assembly of parts in the manufacturing sector globally. This is applicable in the automobile, electronics, and appliance industries. In this category, global resources, economy, resources, and marketing initiate the need of implementation of technology in these sectors. This eliminates time and geographical boundaries. Organizational Changes In this category, reorganization in the structure of businesses has necessitated application of technology in organizations. There are several factors in the organization that initiate changes in the role of technology in an organization. Structural reorganization of an organization emerges as an essential aspect in this category. This is through automation and consolidation of functions of an organization. First,changes in organizational structures have led to the scrapping of middle management ranks and support staff. These ranks include secretarial and clerical positions. This move cuts cost and also increases flexibility as new and more advanced technologies are implemented in an organization. Today, it is true that most organizations have consolidated tasks and functions in telecommunications and data processing. Most organizations are also realizing the need of capital investment on technology other than on support staff. Restructuring of organizations have also led into less, efficient, and manageable staff. Secondly, significant merging and acquisitions of organizations have taken course in the past years. For example, in the 1970s the energy crisis led to merging and acquisitions of corporations. Airlines also faced the same fate of merging as a result of deregulation. Today, industry players in the automobile, appliances, and electronics sectors are merging. This is as a result of stiff competition from large players. Reorganization and rationalizations of information technologies in these organizational structures takes place (Ward & Peppard, 2003). For example, the airline industry comprises of several tasks and services such as crew, marketing, aircrafts, and human personnel just to mention a few. In this case, it is essential that computer systems integrate all these factors from the various stakeholders in order to streamline functioning of the airline. Such an industry merges with related stakeholders so as tasks are carried out more effectively. Merging in this industry calls for massive restructuring of the management of the organization. This facilitates telecommunications and data processing activities to run effectively. Third, security and crisis management of both physical and human resources has proved a challenge in most organizations. For example, the Three-Mile nuclear plant tragedy. Accidents occur in industries some of which are inevitable. However, integration of information technologies in these industries proves essential in evading some tragedies. It is possible to contain, prevent, and respond quickly to crises such as fire, earthquakes, and theft. With intense competition in the market today (Luftman, 2003), organizations are highly considering reorganization so as to remain market driven. This entails the shift from product division to market division. This move significantly results in change in the flow of operations. For example in the automobile industry, customer demand drives manufacturing more than manufacturing materials and parts. Customer demand drives significant changes in the reorganization of support activities and functional activities in the manufacturing sector. This consequently involves application of information systems. Database management systems and customer order entry systems are essential in efficient service delivery. Acquisitions and mergers, staff consolidation, crisis management, and market drive in organizations are factors that point to the importance of information systems. Technology Revolution This is the enabling and the force behind great milestones achieved in business operations in organizations. The revolution that has taken about 25 years has brought into action innovative information technologies. There are three fundamental factors driving information technology revolution. First, sharp experiences (Druker, 1969) have resulted from the use of new technologies in addition to their increased value. Personal computers today offer more memory and processing capabilities than mainframes a decade ago. This goes hand in hand with the decrease in prices of personal computers with better memory and processing capabilities. Small and medium business enterprises are able to acquire low cost information technologies. In addition, these technologies offer higher performance which boosts efficiency and service delivery in organizations. Technological advancements also stream down to reduction of costs in fiber optics, digital systems, and switching systems. Second, information systems have enabled distribution over time in relation to memory, switching, and intelligence. Technology has enabled distribution of these capabilities to the end user. Distribution of activities reduces expenditure on experts and large expenditures on the use of information technologies. Increase in connectivity comes up with the emergence in multi user capability of processing and switching information. Finally, integration of technology (Davis, 2000) is on the rise. It is possible to send, distribute and process different types of information such as text, voice, and data via a single integrated technology. This is as a result in the advent of digital end to end technologies. These characteristics bridges gaps between usage and user needs. In addition, these characteristics explain the resulting importance of information technologies in the world today. Conclusion Information technologies are highly regarded as fundamental aspects in the existence and business operations of an organization. They include computer networks, terminals, and computers. These technologies are widely gaining recognition and attention from top management. Management in charge of communication within the organization takes part in strategic planning in the organization. Notably this takes place in large industries such as airlines and financial systems. These managers take charge as chief information officers (CIO). Notably, there are four drivers of the importance of information systems in an organization. First, increased competition has forced organizations integrate information technologies. This is done so as to gain a competitive edge over others. Value-added services also differentiate organizations from others. Second, global business activities have broken geographical and time boundaries between various industries. Third, organizational changes have resulted in consolidation of staff, acquisitions and mergers, and deploying market-driven strategies. In addition, over the years the prices of information technologies have decreased increasing affordability. Applications of information technologies have evolved over time. They are applied in linking suppliers and customers. 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