This document is about changes which have occurred within business environment due to technology. Layout of this report is based on the Table 1-1 of the Laudon’s book "Management Information Systems: Managing the digital firm".
Changes in the business environment brought by technology
Changes in the Business
brought by Technology
T. Shakthi Fernando
Sabaragamuwa University of Sri Lanka
Department of Accountancy and Finance
BSc. Financial Management (Special)-Undergraduate
This study is basically about the changes occurred in business environment as a result
of technology. Changes occurred in business organizations are described under three
categories as change in technology, change in management and change in
Change in Technology 05
Change in Management 08
Change in Organizations 11
There is no any controversy that the business environment has been rapidly modified
with new discoveries and updates in Information Technology. Information technology
plays a vital role in current business environment. Even the spending habit of
companies has been critically amended with the progress of Information Technology.
In 1965, less than 5% of the capital expenditures of American companies were
invested to Information Technology, according to a study by the U.S. Department of
Commerce’s Bureau of Economic Analysis. It rose to 15% after the introduction of
Personal Computers in the early 1980s. It reached more than 30% by the early 1990s
and it represented nearly 50% by the end of the decade. It is identified that businesses
around the globe presently spend over 2 trillion$ a year on Information Technology.
A momentous relationship between business environment and Information
Technology commenced with the invention of microprocessor. Ted Hoff, who was a
young Intel engineer, initiated a way to put the circuits essential for computer
processing onto a tiny piece of silicon in 1968. It was the foundation of important
technological inventions such as local and wide area networks, enterprise software,
the Internet and desktop computers, which have altered the business world upside
down. Today no one will clash that Information Technology has become the spine of
commerce. Information Technology aids to the whole process of businesses starting
from the inauguration of operations till transferring the final product to the customers’
This scrutiny is based on adjustments and modifications in business environment
brought by Information Technology. It is chiefly identified how the new discoveries
and updates in Information Technology has influenced to the business environment
under three core classifications. Those are change in technology, change in
management and change in organizations.
Change in Technology
Cloud computing platform emerges as a major business area of innovation
century, it has been categorically effortless to manage Information Systems in
companies. Basically, Information System can be identified as a set of correlated
components that collect, retrieve, process, store and distribute information to assist
decision making, coordination and control in an organization. Evidently, it can be
recognized that the development in technology within last few years has critically
supported to the function of managing Information Systems.
Cloud computing can be made out as one of key innovations in technology which has
been advanced. In here, a flexible collection of computers in the Internet has
inaugurated to perform tasks traditionally performed by corporate computers. Cloud
solutions have been rapidly adopted by the market with companies outsourcing and
creating their models directly into the cloud architecture. Here the point is issue of
physical computers which was compulsory to maintain the business has been solved
As an example, suppose number of clients of a business is escalating day by day as a
result of a new product release. Then if it is not properly executed, the failures which
can be occurred due to not providing the structure to support such sudden change can
evidently destroy the growth of the business. Basically the massive growth is not a
problem for the cloud architecture. Company can just commence with few servers and
grow as needed.
Small and midsized businesses can achieve potential benefits from cloud computing,
since they can tap Information Technology infrastructures, platforms and software
that could be deployed only by big companies earlier. Companies can utilize world’s
largest supercomputers without purchasing and maintaining it with the succor of
cloud computing. When the computing resources are provided by another
organization over a wide-area network, cloud computing is parallel to an electric
power utility. It enables the providers to reduce individual usage costs and centralize
infrastructure costs. User only pays for what they consume. A cloud customer can
spend more time investing in core business rather than spend for managing
complicated Information Technology resources with a cloud computing approach.
Growth in Software as a Service (SaaS)
Software as a Service (SaaS) can be described as a software distribution model in
which applications are hosted by a service provider or a vendor and made accessible
to customers over a network, basically the Internet. Major business applications are
currently delivered online as an Internet service rather than as boxed software or
custom systems. SaaS has become a general delivery model for many business
applications such as office and messaging software, Data Base Management System
software, CAD software, Accounting software, etc. It has assisted for plummeting
Information Technology support costs by outsourcing hardware and software
Generally SaaS providers do pricing of applications using a subscription fee, most
probably a monthly fee or an annual fee, unlike traditional software which are sold as
license. At the same time the initial setup cost for SaaS is significantly lower than the
enterprise software. SaaS providers basically price their applications based on certain
usage parameters such as number of users utilizing the application. On the other hand
there is a chance to charge per transaction, event or other unit of value, since
customers’ data retained with SaaS provider. As well as a free service is provided
with limited functions in this model. Fees are charged for further enhancements in
functions. There are some SaaS applications which are completely free, since revenue
is being earned from alternative sources such as advertising.
There are some key benefits of SaaS model. It is categorically easy for administration
purposes. As well as automatic updates and patch management is available. On the
other hand it is globally accessible. At the same time there are some criticisms against
SaaS model. It is considered the use of SaaS is a violation of the principles of free
software. Here the users of SaaS do not have a copy of the executable file. It is in the
server. Then it is not conceivable for user to change it. As well as SaaS is like a
spyware. It gives an excessive power over the user to server operator.
A mobile digital platform emerges to compete with the PC as a business system
Emerging mobile digital platform can be identified as a latest innovation in
Information Technology, introduced in last few years. Basically it is about accessing
the Internet through highly portable netbooks and smartphones instead of using
traditional desktop or laptops. Currently mobile Internet is the fastest developing form
of Internet access. It has been ascertained that mobile Internet users have been grown
to 63% of all Internet users by 2013.
The fastest growing segment of the computer and cell phone markets are smart
phones like the RIM Blackberry, Apple iPhone, Samsung Galaxy. They can access to
the Internet through broad band cellular telephone networks and Wi-Fi wireless local
networks. It is identified that more than half of all cell phone sales in the U.S. by 2013
are smartphones. Smartphone sales are growing at 15-20% per year.
In this era, there is a straight influence to businesses from mobile digital platform. As
a result of that working activities of employees can be performed anywhere, unlike
the traditional way, where employees used to work in offices. The new mobile
workforce is consisted with workers who work at their homes, coffee shops, airports
or on trains. As a consequence of that PC sales shipments and Desktop shipments
have been dropped in last few years. At the same time portable laptops and smaller
netbook shipments have climbed promptly.
The mobile digital platform increases the speed of information flow, the velocity of
decisions, the efficiency of decisions and it improves the quality of decision making.
In that case, it has taken many functions including transmission of data, surfing the
web, transmitting e-mail and instant messages, displaying digital content and
exchanging data with internal corporate systems.
The major effect of mobile digital platform commenced with the release of Apple
iPhone. Apple opened its iPhone software to developers, and then opened
anApplications Store on iTunes where business users can download hundreds of
applications to support collaboration, location-based services, and communication
Change in Management
Managers adopt online collaboration and social networking software to improve
coordination, collaboration, and knowledge sharing
Not only the technology has altered, which was used in business organizations as a
consequence of development in Information Technology, but also the traditional
methods of management have been ignored and management function has now
become trouble-free with the aid of Information Technology. On the other hand
management has been excessively innovative, since Information Technology has
offered thousands of paths, which can be used for better implementation of
Currently managers are using social networking software and online collaboration
with the intention of improving coordination, collaboration and knowledge sharing.
Google Apps, Google Sites, Microsoft’s Windows SharePoint Services are more
frequently used by over 100 million business professionals worldwide in order to
support blogs, project management, online meetings, personal profiles, social
bookmarks and online communities.
People have got the possibility for making a platform for their activities in web,
editing and adding content to web pages and sharing knowledge with others.
Applications and services that enable for collaborative activities via the Internet are
described as social software. It enables people to interact with others. It has made the
web an online meeting place where anyone can connect and collaborate with others.
Principally those are used for management purposes in organizations.
There are lots of plus points, which can be concluded. People can share their ideas
and experiences with others and get their comments on them. As well as it can be
used for building online communities. It can be used in organizations in order to
strengthen the management system. It would increase the effectiveness. At the same
time, team spirit of management teams can be improved with the intention of getting
the highest potential out of them toward the management process. On the other hand it
is possible for sharing problems, processes and outcomes with global community and
conceivable to get the assistance from experts. Currently social media networks such
as Facebook, Twitter and MySpace are highly contributing toward management
process by supporting for coordination, collaboration and knowledge sharing.
Business intelligence applications accelerate
Recently it has been realized that Information Technology can be used to enhance
decision making process. More powerful data analytics and interactive dashboards
provide real time performance information to managers in order to enhance decision
making. Business intelligence applications are used with the intention of attaining
benefits from Information Technology. The most frequently used business
intelligence applications are Oracle Business Intelligence Applications.
Business intelligence applications deliver role-based intelligence for everyone in an
organization from front line employees to senior management. That enables them to
make better decisions, implement proper set of actions and maintain the business
process without messing it up. Basically business intelligence applications pull data
from the whole entity and present information to users in a meaningful way to
improve decision making. It assists to organizations for optimizing corporate profits
Today companies have realized that the information is highly valuable for decision
making. It is an essence for accessing and understanding the information in order to
improve the companies’ ability to manage costs and grow margins. At the same time
companies need to access and extract the right data from systems.
In order to achieve that purpose analytical applications can be used for accessing to
data. In practical use a financial analytic application can track actual performance
versus budget or measure the profitability. A sales analytic application can track the
size and identify most profitable opportunities. A supply chain analytic application
can optimize inventory levels and predict product fulfillment needs.
Today most organizations have identified the value for analytic applications. It is
widely used to strengthen the decision making process in organizations. Same as that
it enables them to implement better plans. At first, before establishing it organization
should decide whether those analytic capabilities are built in house or should be
purchased from a packaged application vendor.
Then the organization should ensure that the alternative they selected is the best at
pulling data from multiple systems around the enterprise and delivering useful
information to decision makers.
Virtual meetings proliferate
Another more important innovative concept of Information Technology is virtual
meetings, which are highly used in business environment at present. Virtual meetings
can be simply described as real-time interactions that take place over the Internet by
using features such as audio and video, chat tools and application sharing. Participants
in virtual meetings use an application to conduct meetings. Currently most probably
used application for virtual meetings is Skype.
The key benefit of using video conferencing and web conferencing technologies in
business environment is the reduced travel cost and time. On the other hand the
process of decision making can be optimized by the concept of virtual meetings. At
the same time virtual meeting tools can be used to enhance the collaboration efforts in
The basic idea of virtual meetings is the ability of a group of people to communicate
at one time from different locations. Companies have started to use it to be more
effective. It provides the ability for participants to balance their work life. On the
other hand it senses for budget of companies.
Most probably the concept of virtual meetings is used by organizations which are
having virtual teams in different geographical locations. The key benefit they consider
is reduced travel cost. On the other handit has eased the time management function of
organizations. Employees should not be released from office work when they have to
attend for a business meeting. They will not have to waste their office hours with the
arrival of virtual meetings. Virtual meetings have also offered an opportunity to
balance professional work and family life, since it will not be disturbed by after-work
routines and activities.
Many organizations in the world, which belong to various industries such as finance,
communication, education, health, etc. are using virtual meetings and getting its
It has offered them the opportunity to achieve organizational goals and objectives in a
more effective and simple way. It has reduced costs, increased productivity and
efficiency in business entities.
Changes in Organizations
Web 2.0 applications are widely adopted by firms
When the globe steps forward with modern inventions and updates of Information
Technology, it can be noticed that organizations throughout the world also have
started to change without operating in traditional way. Some of traditional concepts
and methods related to organizations have been neglected and some have been bound
with Information Technology. One of changes which have been applied in
organizations is using of Web 2.0 applications. Web 2.0 is simply described as World
Wide Web sites that use technology beyond the static pages of earlier web sites.
Examples for Web 2.0 include social networking sites, blogs, video sharing sites,
wikies, web applications and hosted services. It allows users to interact and
collaborate with each other in a social media dialogue.
There are lots of benefits which have been achieved by organizations that are using
Web 2.0 applications. It includes more effective marketing, higher revenues, more
innovative products and services, better access to knowledge and lower cost of doing
businesses. It has been recognized that most successful companies are strongly
integrated to Web 2.0 technologies with work flows of their employees. And also they
have created a “network company”, which is links themselves with customers and
suppliers through the use of Web 2.0 tools.
Web 2.0 technologies are utilized as a powerful tool in organizations. It brings more
employees into daily contact at lower costs. At the same time it uncourageous
participation in projects and idea sharing. It makes the company’s pool of knowledge
deeper. On the other hand Web 2.0 applications are strengthening bonds with
customers and developing communications with suppliers and other outside parties.
Most companies who are using Web 2.0 applications have assured that they have
successfully attained plus points such as greater ability to share ideas, improved
access to knowledge experts, reduced costs of travel, operations and communication
with the assistance of Web 2.0 technology. As well as it has decreased the time to
market for products and had the effect of improving employees’ satisfaction. On the
other hand, it has increased customers’ awareness and consideration of companies’
products and has improved customer satisfaction.
Telework gains momentum in the workplace
Telework is rapidly changing the business environment with development of
technologies such as National Broadband Network (NBN), web conferencing and
cloud computing. In modern world it has been possible to work away from traditional
offices with the support of net books, iPads, iPhones, BlackBerrys and the Internet.
Basically telework provides benefits such as reduced office costs, greater work and
family life balance, reduced staff turnover and increased productivity. Moreover
teleworking saves a lot of travelling time, fuel costs and brings flexibility to the
workplace. Organizations can get the service from professionals and skilled people
who are not available locally, when they are utilizing telework.
More than a third of micro businesses currently use the Internet to enable employees
to work from home which represents an 8% increase in two years. More than 75% in
larger businesses now have the facility for staff to work from home by using the
Internet. Studies have revealed that 83% of employers allow teleworking on an ad hoc
basis. At the same time 58% offer telework at least one day per month, when 57%
offer telework at least one day per week. About 37% of employers allow full time
teleworking. The dissemination of telework varies by industry, size of employer and
type of employer. Large firms normally offer more workplace flexibility than small
organizations. 55% of employers with fewer than 100 workers offered telework at
least one day per month, compared to 73% of employers with 20,000 or more
Publicly traded companies and nonprofit organizations tend to offer more telework at
least one day per month, when compared to private held companies and public
employers. Researches show that employers who allow teleworking more often and
who have established culture of flexibility have lower voluntary turnover rates.
It has been identified that employers, who have less than hundred workers offers
workplace flexibility programs for 5.8%, when employers with 20,000 or more
workers offers workplace flexibility programs for 7.3%.
Not only that, but also it seems like telework is gaining momentum in the federal
governmentalso. Congress passed a law ordering each federal agency to designate a
Telework Managing Officer who will develop and implement a telework policy.
Co-creation of business value
In this era sources of business value have shifted from products to solutions. It is a
modern marketing concept. Its core meaning is that businesses should not be in the
industry just to produce something. That product should be a solution for customer
needs. Concept of co-creation of business value has integrated with Information
Technology now. In that case supply chains and product development are more global
and collaborative than in the past. As well as customers help firms to define new
products and services.
The process of value creation is rapidly shifting from a product and firm centered
view to personalized consumer experiences. As value shifts to experiences, the market
becomes a forum for conversation and interactions between consumers and firms.
Evidently consumers’ opinions are provided to organizations through social media
networks such as Facebook, Twitter, MySpace, etc. Same as that Audi Company has
provided an opportunity to customers to create their dream car through Audi web site.
Customers can simply create their dream car with specifications they expect by using
special software. Then Audi will assemble that car for customer as his/her
preferences. It provides a good understanding about customers’ expectations and their
preferences. It benefits to the organization, since they can have an idea about how the
products should be developed as customers’ expectations. Even a hit of Facebook is
used by organizations for product development, since they are representing
customers’ preferences and expectations. Suppliers also can access to any information
of organization from its website.
Online auctions for hotel rooms and airline reservations can be considered as
examples for this growing concept. Auctions are serving as the basis for pricing goods
and services online. The concept of online auctions is mostly used by eBay and
getting the maximum benefits out of that. The key point of auction process is that
prices truly reflect the utility to the customer from the customers’ point of view. It
means customers do making payments according to their utility rather than according
to the company’s production cost.
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