Impact of IT on organizations and markets

Megha U S4 MBA ISMS

 Information technology (IT) is dramatically changing the business landscape. Although organization cultures and business strategies shape the use of IT in organizations. IT significantly affects strategic options and creates opportunities and issues that managers need to adopt in many aspects of their business.

Objectives
Understand the impacts of IT on organizations and organizational performance at several levels
People Processes Products Overall performance

Why Firms adopt IT?

Retaining expertise of employees. Enhancing customers satisfaction with the companys products. Increasing profits or revenues.

Impact on Employee
IT can facilitate employee learning. IT also causes employees to become more flexible, and enhances their job satisfaction .

Impact on Employee Adaptability

Employees are likely to adapt when they interact with each other Acceptance to change They are more prepared to respond to change

Impact on Employee Job Satisfaction

Recent study found that in organizations having more employees sharing knowledge with one another, turnover rates were reduced, thereby positively affecting revenue and profit. IT also provides employees with solutions to problems they face in case those same problems have been encountered earlier, and effectively addressed

How IT Impacts People

Knowledge Management Sys

Knowledge

Employee Learning

Employee Adaptability

Employee Job Satisfaction

Impact on Processes
IT enables improvements in organizational processes such as marketing, manufacturing, accounting, engineering, and public relations

These impacts can be seen along three major dimensions

Effectiveness Efficiency Degree of innovation of the processes

Effectiveness, Efficiency and Innovation

Effectiveness is performing the most suitable processes and making the best possible decisions Efficiency is performing the processes quickly and in a low-cost fashion. Innovation is performing the processes in a creative and novel fashion, that improves effectiveness and efficiencyor at least marketability.

Impact on Processes
Impact on Process Effectiveness
IT can enable organizations to become more effective by helping them to select and perform the most appropriate processes. IT enables organizations to quickly adapt their processes according to the current circumstances, thereby maintaining process effectiveness in changing times .

Impact on Process Efficiency

Managing knowledge effectively can also enable organizations to be more productive and efficient

Impact on Process Innovation

Organizations can increasingly rely on knowledge shared across individuals to produce innovative solutions to problems as well as to develop more innovative organizational processes

How IT Impacts Organizational Processes?

Process Effectiveness
Fewer mistakes Adaptation to changed circumstances

Knowledge Management

Process Efficiency Knowledge

Productivity improvement Cost savings

Process Innovation
Improved brainstorming Better exploitation of new ideas

Impact on Products
Impact on products can be
Value added products Knowledge based products

Knowledge Management

Knowledge

Value-added Products Knowledge-based products

Impact on Value-Added Products

IT processes can help organizations offer new products or improved products that provide a significant additional value as compared with earlier products Value-added products also benefit from IT due to the effect the latter has on organizational process innovation

Impact on Knowledge-Based Products

IT can have a significant impact on product that are knowledge based like those in consulting or software development etc. Knowledge based products can sometimes play a significant role in traditional manufacturing firms

Impacts on Organizational Performance

Direct Impacts
Knowledge is used to create innovative products that generate revenue and profit

Indirect Impacts
Use of IT to demonstrate intellectual leadership within the industry, which, in turn, might enhance customer loyalty Use of knowledge to gain an advantageous negotiating position with respect to competitors or partner organizations

Information Technology Services

Figure 3-6

Technology and organizational learning: Transforming Organizations

Corporate change must be planned and managed Organizations may have to struggle with different experiments and learn from their mistakes

The changing nature of work

Facilitates flattening of hierarchies. Increases the speed of decision making. Firms are reducing the number of employees down to a core of essential staff and outsourcing whatever work they can,to countries where wages are significantly lower.

Flattening Organizations

Figure 3-9

Impacts of IT on Business Processes and Organizations

Redefining Organizations
New and improved product capabilities New business models Improving the supply chain Impacts on Manufacturing

build-to-order (pull system)

A manufacturing process that starts with an order (usually customized). Once the order is paid for, the vendor starts to fulfill it Real-time demand-driven manufacturing.

Changes in the Supply Chain

Impacts on Finance and Accounting

E-markets require special finance and accounting systems. Most notable of these are electronic payment systems

Impacts on Human Resource Management and Training

IT is changing how people are recruited, evaluated, promoted, and developed IT also changes the way training and education are offered to employees Companies are cutting training costs by 50% or more, by virtual courses.

Impacts of IT on MARKETING
Improving Direct Marketing
Product promotion Advertising New sales channel Direct savings Reduced cycle time Improved customer service Brand or corporate image Customization Ordering systems Market operations

 Product Promotion- This is where websites and mobile phones surrport sales promotion. For example individual codes on the packet helping the consumer to enter the code into their website to see if they had won a prize or not. Advertisements- are used to build long term image for the product. The main form of advertisement will be news papers, television ads, banners and web pages.

 Money back rebates - : Consumers are offered a part as money back if the receipt and barcode are mailed to the producer. New Media - This is where websites and mobile phones surrport sales promotion. For example individual codes on the packet helping the consumer to enter the code into their website to see if they had won a prize or not.