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Correlation Between Modern Management Practices And IT Trends
- 1. CORRELATION BETWEEN MODERNMANAGEMENT PRACTICES AND IT TRENDS
- 2. MEANING OF MANAGEMENT& INFORMATION TECHNOLOGY Management: Management is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated objectives Information Technology: IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and securely retrieve information
- 3. HOW IT INFLUENCESMODERN BUSINESSES Hard to imagine running a business without Information Technology! Businesses have gone global, beyond the national boundaries Off shoring / outsourcing reduces the cost and allows management to focus on core competencies IT facilitates better control over off-site locations Productivity has soared with the advent of IT Helps faster and smarter decision making Helps secure critical business information
- 4. IT HAS CHANGEDTHE FACE OF BUSINESS Operating expenses have gone down, amount spent on technology has increased Helped in understanding customer better Increase in customer, investor as well as supplier base Need for IT skills in lower levels of organization IT has taken a toll on employee count
- 5. NEW TRENDS INIT Cloud Computing Software as a Service (SaaS) Virtualization Social Networking Use of Digital Devices Information Economy
- 6. IMPACT OF ITON FINANCIAL MANAGEMENT Shift from physical books to Tally, and Tally to ERP Centralized global accounting and financial management Smart business decision making possible with the help of Data Analytics Outsourcing of back-office functions, viz. Accounts Payables and Receivables, Procurement, Payroll etc. Better financial control by comparing budgets vs. actuals Anytime anywhere availability of information
- 7. ROLE OF ITIN CORPORATE FINANCE FUNCTIONS Different functions of Corporate Finance: Financial and Business Planning Procure to Pay Accounting to Close Order to Cash Payroll Tax Planning and compliance Audit: Internal , Statutory, Security Treasury
- 8. HOW IT HASTRANSFORMED THE FINANCIAL WORLD Internet Banking has shortened the bank queues Choice of investing in shares of Reliance or AT&T Historical data available on fingertips Investors make more informed decisions Globalization of financial services IT has led to financial innovation, viz. derivatives, etc Reduction in time taken for financial transactions
- 9. IMPACT OF ITON HUMAN RESOURCE MANAGEMENT Use of IT from Recruit to Retire Prospective candidates being reached through internet instead of newspaper Performance management made easy History of an employee at the fingertips of the manager Informed decisions could be taken regarding appraisals, hikes, etc
- 10. IMPACT OF ITON SALES & MARKETING Whole world has become a prospective market IT comes into picture right from pitching clients to after sale services Internet emerged as the best medium for advertisement E Commerce facilitates the final transaction Online after sales service through “Webex” sessions Cloud computing making its mark in sales & marketing too. Eg: www.salesforce.com
- 11. MANAGING IT SYSTEMSIN MODERN BUSINESS Management of IT Systems itself has changed due to the use of IT in Businesses Critical to keep IT infra up & running 24 X 7 Vital to control IT budget & resources Outsourcing IT maintenance solves the purpose BMC’s belief: “ Business Runs on IT, IT runs on BMC Software ” Other major players: IBM, HP, CA
- 12. IT HAS MADEMANAGER’S LIFE SIMPLE Mobile revolution has impacted daily life Data available at any point of time, as and when required Stay connected with internet 24*7 Decision making made easier Option to work from remote locations Audio & Video Conferencing made virtual meetings possible
- 13. DOES IT MATTER?“ When a resource becomes essential to competition but inconsequential to strategy, the risks it (its absence) creates become more important than the advantages it (its presence) provides. ” - Nicholas G. Carr Harvard Business Review
- 14. THREATS OF INCREASINGIT DEPENDENCE Data theft is the biggest risk Easier to hack into a computer system than into a human brain System crash : a normal phenomenon. So backup becomes inevitable Privacy can be an issue in case of Cloud Computing & Virtualization Cyber Laws in India are still ineffective Over-exposure to technology may harm employees’ health
- 15. IT CAN’T SUBSTITUTEHUMAN ELEMENT Human intelligence is required for holistic analysis Some business decisions have to be taken based on intuition Computers don’t have emotions, managers have it Businesses can run without IT, not without men
Editor's Notes
- #3 When computer and communications technologies are combined, the result is information technology, or "InfoTech". Information technology is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information.
- #4 As IT’s power and presence have expanded, companies have come to view it as a resource ever more critical to their success, a fact clearly reflected in their spending habits. According to a study (as mentioned in Harvard Business Review), in 1965, less than 5% of the capital expenditures of American companies went to information technology. It rose after the introduction of the personal computers and stood at more than 50% in 2000. It must have gone up even more till now. More than 100 out of Fortune 500 companies have R&D centers in India. And most of them have business operations here. To have better control over their subsidiaries, all the companies have advanced IT infrastructure. This helps all the sites to stay connected and work in sync with each other. IT has also facilitated BPO, or Business Process Outsourcing. It simply means to outsource a part of your business operations to an outside vendor so that you can concentrate on your core competencies. Though small level outsourcing used to be there even before IT had emerged as an advanced tool, outsourcing now has become a big business with the progress in IT. It saves a lot of cost, time and effort of the organization. IT facilitates better control of off shore sites . Example: Sitting there in US, the Top Management of Symantec Corp. has all the data about Symantec’s business Worldwide in US, EMEA, APJ on their finger tips. This is all possible only because of IT. With the automation of various mundane activities, IT has helped increasing the productivity in various processes. In order to make sound business decisions, management is dependant on data which is accurate and readily available. In this modern era everything as to happen at lightning speed. ‘IT’ makes it possible to seek the relevant data in matter of minutes. It speeds up the decision making process – thus helping the management in it’s endeavor to achieve the corporate objective. ‘ IT’ facilitates information sharing as well as ensures the security of data. Password protected data sharing ensures the data is made available only to the restricted set of people.
- #5 With increasing technology adoption , commercial costs, internal communication costs and service costs have decreased. Amount spent on these items have gone down due to inexpensive solutions provided by IT. On the other hand, IT infrastructure form a major part of balance sheet now. IT has also played a role in strategic areas including the understanding of customer satisfaction for current products and services, competitor knowledge and customer buying behavior. Online surveys have made a lot of information available to take informed decisions. Helps reach out to wider customer and investor base globally : Businesses are taking the global route to increase their customer base, investor base and profitability. Online transaction management (B2B and B2C) removes the barrier of collocation for the seller and buyer (collocation was a requisite in the traditional economy). The same theory applies to the investors – all the information needed by the investors about an organization is easily made available on the net. Traditionally investors were reluctant to invest in unknown territories. ‘IT’ has removed the territorial borders!! It has also made it possible to reach suppliers in any corner of the world and purchase at the most competitive price. Right from the top management of the organization to the lowest level, every employee needs to have some knowledge of IT. In our office, even office boys know how to use MS Word and Excel, how to scan a page and how to give a print command. Since a lot of processes have automated, the need for man power has gone down. E.g.: Nowadays, you don’t need security guards at each floor, CCTV solves the purpose. But, we should not forget that the company can’t afford to part away with all its manpower at any point of time.
- #6 Cloud computing describes a new supplement, consumption and delivery model for IT services based on the Internet, and it typically involves the provision of dynamically scalable and often virtualized resources as a service over the Internet In general, cloud computing customers do not own the physical infrastructure, instead avoiding capital expenditure by renting usage from a third-party provider. They consume resources as a service and pay only for resources that they use. It is a paradigm shift following the mainframe and client server shifts that preceded it Cloud computing is a much broader term than SaaS Example of TV and a Cable TV SaaS - SaaS software vendors (such as SalesForce.com) may host the application on their own web servers or upload the application to the consumer device, disabling it after use or after the on-demand contract expires. Virtualization - Different virtual machines can run different operating systems and multiple applications on the same physical computer Though social networking first emerged as a tool to remain in touch with your friends and social circuit, it has become a very good medium to advertise your products, promote your events and also, to find out more about the person you want to hire. Digital devices such as Blackberries, Kindle, etc have changed the way man lives. You can read your mails on blackberries and instead of buying big heavy books, you can buy a soft copy and read it on Kindle. This next decade will truly redefine what we’ve come to know as the information economy. It’s an economy defined by the value of intellectual property, the value of content, the value of ideas. The value of information. It’s not a new innovation but a new era, where information and it’s security is the utmost important objective of the organizations. What makes information so powerful today is how easily it’s replicated or duplicated, moved from one place to another – how quickly it can be distributed. So it’s very important to make sure that the information is kept safe.
- #7 Before the emergence of IT, people used to maintain accounts in physical books. It was a tedious process, as all the steps of accounting had to be done manually, right from recording entries to making final accounts. But now, you just need to pass a journal entry in your software, and it will take care of the rest of the process. Initially, stand alone accounting software like Tally were the most widely used accounting software in India and even today they are used by SMEs. With further advancement in technology, ERP came into being. Now, Oracle and SAP enable you to pass journal entries in India, which automatically integrate into your global accounts online and gives you various reports just at the click of a button. They also help you integrate various functions like supply chain, production, order booking, sales, Finance, HR on a common platform. Consolidation of Financial data is possible much more efficiently One does not need to spend whole day trying to analyze some complicated accounting reports. There are various applications available which analyze the data and present the final product. The easiest application is what everyone uses in daily life – MS Excel, MS Access, etc. Many functions of finance also are now outsourced. Accounts of a company operating in US are handles by another company located in India. Do you think this could have been possible without IT? Various planning tools are available which help you allocate your resources well. One example is Oracle Hyperion. It is just like a dashboard which gives all the info at one place. You can plan your budgets and compare them with the actuals, determine the reason for the variance, all at one place. One doesn’t necessarily have to be at his office to get access to the data, be it financial or otherwise. In today’s world, you can access any data even from your cell phones. Easy access to data has changed the way businesses around the globe are operated.
- #8 Finance department of the company does all these listed tasks. Depending upon the size of the company, these departments may be handled by different teams or there can be only one team handling all the tasks. Financial planning : Business modeling has evolved with development in ‘IT’. It is easy to build ‘What-if’ scenarios to understand the variability of the market on the financial plan for the organization. General Ledger department deals with recording all the transactions in the books of account. This is the primary source of financial data, which is later on summarized and shown in the final accounts of the company. As told earlier, in earlier days, these transactions were recorded in physical books and then posting was done, trail balance was prepared and then final accounts used to come out. Nowadays, entries are done in computer accounting applications (SAP, Oracle, Tally, etc) and final accounts are churned out automatically. Use of computers have eliminated many accounting errors, like errors of commission. Though errors of omission and errors of principle could not be eliminated completely, though computers have made it easy to identify these mistakes. Accounts Payable: This department is the link between the company and the suppliers or vendors. AP receives the invoices from the suppliers, processes them and makes sure the payment is made on time. With the help of various computer applications, AP’s job has been simplified a lot. The hard copies of the invoices are scanned and kept safe in digital form. This saves space and also the hassles of maintaining files. Then, once the information is entered in the accounting software, the tax to be deducted at source is calculated automatically. As per the terms with the suppliers, the due date for payment is determined by the software, and on the due date, the payment is made through electronic transfer. Use of IT in each step of the process. Accounts Receivable : This department is responsible for collecting the dues from the customers. Computer applications help AR determine the credit limit of the person, how much amount of credit could still be given to the customer, what is the due date of payment, how long has it been since the customer hasn’t paid his dues, etc. Payroll: All the payroll activities are now done online. This department makes sure that your correct monthly salary reaches your bank account on time. When I say correct salary, it means that this department has to make sure how much taxes need to be deducted from the salary, if there are any deductions to be made on account of advances taken, amount against ESOP’s, loan installment, etc. All this information is pulled out automatically from the accounting software. Also, how many days was the employee present is ascertained by his leave card which is maintained online. Tax: Tax compliance is one area where no company would like to falter. As we saw, tax deducted from employees and suppliers payment is automatically recorded in the books. Apart from this Tax Deducted at Source, or TDS, the tax department has to deal with VAT, Service Tax, Income Tax, etc. Thanks to IT, now most of the tax returns are filled online. It has also become easier to calculate tax liability, amount refundable from tax departments, etc. Audit: IT has rendered the task of an auditor very easy. There are applications which chose the sample for the auditors, and then verify the accuracy of those samples. All the records are available in digital format, so it becomes easier to link back to the source of any particular data. The quarterly and annual results of even big companies like Reliance and Infosys come out in just a matter of days, while this used to take months earlier. Treasury: Right from raising capital through IPO to arranging short term credit for the working capital of the company, all these tasks are done online nowadays. If the company has extra funds, those funds could be channelized into various investment options available, after making a complete use of IT.
- #9 Information Technology has completely changed the way the financial world operates. Almost all the operations are now done on computers. Right from the banking and broking services to investment advisory services, all areas of finance have been greatly impacted by the emergence of IT. Everyone knows that the banks which started offering internet banking first had become an obvious choice for the customers. Nowadays, almost all the banks offer these services. All the banks are connected to each other through internet and transactions take place in real time. This has made lives of the customers as well as the bankers very easy. Also, in case of customers, nowadays, the real money even doesn’t come to their hand. Their salaries are transferred online and they make payments through debit cards. In time to come, Indian government will have to print Gandhiji’s picture on all the debit cards and credit cards, as people would stop using hard cash. The capital markets of all the economies are connected to each other. Subject to various laws, you have the option of investing in BSE in India, NYSE in New York or LSE in London. IT has opened the gates for FIIs. Even for the domestic investors, the time taken to complete a buy or sell transaction has reduced considerably. Earlier it used to take months to complete the transaction, nowadays, the stock comes in your account in just 2 working days. Any historical data could now be accessed with ease. Be it the data for the company you want to invest in or the price of a share few months back, everything is available at the click of a button. Not only that, it’s easier to compare any two investment options on the basis of historical performance. Since the investors have access to historical data, they have access to the opinions of various experts and know about the company in-and-out, they are in a position to take an informed decision. Like the service sector in any other field, even financial services have gone global. This has made it all the more important for financial professionals to acquire foreign degrees like CPA, CFA, etc to cater well to their clients. IT has been main contributor to various innovations in the world of finance. For instance, widespread reach of capital and commodity market derivatives would not have been possible without IT. Though F&O contracts could have been available without IT, but their geographical reach would had been smaller and the administration, very tough. It has become easier for the CFO to hedge his risks using the financial market derivatives. As told earlier, it takes only 2 days now to get the shares in your d-mat account. Money can be transferred to any bank account within a few minutes. There are many other instances also where time required has gone down. This helps in the smooth functioning of the financial activities.
- #10 Right from the time you are shortlisted for an interview till the time you retire from the company, all your records are maintained on the systems now. There are hardly any manual records which the organizations maintain now. Earlier, job vacancies were used to be advertised in the newspaper, which were mostly regional in case of small enterprises and national, in case of larger ones. But now, it’s easier to reach a wider audience of prospective candidates. There are many online portals, like naukri, monster, shine, etc, which facilitate this. Not only that, you get to know the whole background of a person through linkedin. It has become easier to get quality manpower for your organization. The manager can access all the information regarding the performance of his team members any time. What has been the productive time for each employee, leaves taken, target of every employee and daily performance, etc., everything is available in real time with the manager. Resume of an employee, his historical performance reports, etc. could be used in order to manage the team well. Companies give hikes to their employees almost every year, but all the employees could not be given the same hike. It depends on the grade, performance, future prospects of the employee. Not only that, the budget available with the manager also plays an important role in this. So, all these factors could be taken care of by using various applications available.
- #11 You can sell your product to literally any person across the globe. Such is the might of internet. The world keeps shrinking as we progress in the field of IT. Many times, there is no face to face interaction between the seller and the buyer. The product is advertised on the internet, negotiations are done over the mail, payment is made through credit cards and goods are delivered through courier. Even if there are any problems with the goods after the sale is over, it could be sorted out online. Internet has emerged as the best medium for advertising the products. The companies need to find out their own target audience, find a website which has the same target audience as its own and start advertising on it. This is a cheap and effective way of reaching out to consumers. As told earlier, payment of all the transactions can be done with the help of credit/debit cards online or internet banking. This is made possible by E-Commerce. There are many online portals which provide the facility of e-commerce. E.g: Paypal, Crossgate, etc Webex sessions are specially helpful in case of after sale services of computer hardware or software products. It means that the person sitting at the other end gets access to your computer, he can look at the screen and operate your computer. He can, thus, solve your problems sitting at his own place.
- #12 You can sell your product to literally any person across the globe. Such is the might of internet. The world keeps shrinking as we progress in the field of IT. Many times, there is no face to face interaction between the seller and the buyer. The product is advertised on the internet, negotiations are done over the mail, payment is made through credit cards and goods are delivered through courier. Even if there are any problems with the goods after the sale is over, it could be sorted out online. Internet has emerged as the best medium for advertising the products. The companies need to find out their own target audience, find a website which has the same target audience as its own and start advertising on it. This is a cheap and effective way of reaching out to consumers. As told earlier, payment of all the transactions can be done with the help of credit/debit cards online or internet banking. This is made possible by E-Commerce. There are many online portals which provide the facility of e-commerce. E.g: Paypal, Crossgate, etc Webex sessions are specially helpful in case of after sale services of computer hardware or software products. It means that the person sitting at the other end gets access to your computer, he can look at the screen and operate your computer. He can, thus, solve your problems sitting at his own place.
- #13 The mobile revolution has made life hassle free. It keeps you connected with the world anytime. You can attend the conference call even when you are traveling or on a beach! Any data regarding any department of your office 24*7. You don’t need to be in office to access the office data. With the help of high-tech mobiles and USB data cards, you can stay connected with the world even if you are in some hinterlands of the country. With so many tools available with you, you can take decisions quickly. Quick decision making power is one of the signs of effective management. By using facilities like mobiles, internet, laptops, etc, a manager has the option of working from any remote locations. One doesn’t really need to sit at office all the time to finish the job. With the help of Audio & Video conferencing, the finance managers sitting at Dublin, Singapore, New York, Tokyo and Pune can discuss various policy matters and take quick decisions. If these facilities were not there, then they would have had to do this by either sending mails to each other or meeting in person. The first option is very time consuming and the second one is very expensive.
- #14 IT is no longer a part of the strategy as its presence doesn’t give any competitive advantage to its users. It’s because of the fact that all the competitors are also using the same IT infra. But IT’s absence can have devastating effects as the business won’t be able to compete in the market.
- #15 Every coin has two sides. If IT has made a manager’s life very convenient, it has also brought a plethora of threats along with it. Though various technologies have come up to fight cyber threats, there still remain some grey areas in the field of IT. Since whole data is there on the hard disks, it gets very risky. Data theft is one of the biggest threats which come along with IT. In today’s world, when company have not only their own data but also that of their customers, it’s vital to protect that data. Computers might be very powerful. But at the end of the day, there is a human brain behind it. The brains which can make computers also know, how to break into them. Hacking has become a menace in today’s world. Just a few days ago, there were cases of hacking in various MNC’s including Google and Symantec spent a lot of time working on the problems. There have been various instances where the system breaks down, hard disk crashes and all the data is lost. And in some cases, there can be no explanation to the reason. The causes could be anything from virus attacks to power failure. So, keeping a backup becomes very important. Especially, in case of large organizations like BSE, NSE or other big corporations where data is of utmost importance. The companies which host the cloud services or offer virtualization solutions can, with great ease, control and monitor the data of their clients. . It is a proven fact that those employees who sit in front of their computer screens face a lot of problems. It could be anything from headache or weak eyesight to neck and brain strain, etc.
- #16 In many situations, an analysis done by an excel sheet will just give you figures, which no doubt is one of the most important factors which are considered before taking a decision. But figures alone do not show the whole picture. They have to be backed by a few facts to have a complete picture. Many a times, all the indicators would be point in one particular but the manager may have an intuition that the indicators are wrong and would like to take a different path. This can’t be done by IT. And thanks to your gut feel, you end up making profits. Many of the business activities require some emotions, like praising your subordinate on achieving the target before time. You can’t just ask your computer to write a mail for him, or forward him the same mail which you sent him the last time. To motivate that employee, the manager should praise him either personally, or at least a mail with personal touch. Though in today’s world, it’s a very unlikely scenario, but if need arises, the businesses can part with all their machines but not with all their men. At the end of the day, you need a human being to operate the machines. They can’t decide on their own what is good for the business. Though there might come a scenario when machines will become inevitable and men - redundant, but it does not seem to be happening in the near future at least.