Information Technology and Business

Introduction

Tabs can be used the pay the water bill online.

Earlier, banks operated without computers. Ledgers and folio numbers were manually maintained in a physical post card. Interest was also manually calculated. Things took too long.

New age brought a great revolution to various spheres of business and industry. Increased efficiency, etc.

Current age is referred to as

Information age

Digital age

New media age

It is used everywhere:

Business

Industry

Home

Education

Entertainment

Science

Meaning and Definition

Meaning: IT is a set of tools, processes, methods and related equipment to collect, process and present information.

“Information technology is defined as capabilities offered to organizations by computers, software applications, and telecommunications to deliver data, information, and knowledge to individuals and processes”. - Attaran

IT is made of two words - Information and Technology

Information is all about communicating and receiving of knowledge and data.

Technology means the body of knowledge that is used to develop tools and machines for solving various organizational problems.

Information systems are tools that help companies analyze their position in the market and forecast any possible crises in the future.

It includes

computers

networks

mobile and wireless devices

satellite telecommunications

robotics

electronic mail

automated office equipment

Characteristics of Information (CART)

Accuracy: The information is free from errors, mistakes and also personal bias. Incorrect information can lead to incorrect decisions.

Timely: The receiver should receive the information within the defined time. No delays. Latest information only.

Relevant: Not all information is useful for everyone. Information reaching managers should be useful enough so that they can use it in the decision making process.

Complete: Nothing should be incomplete as that may lead to incorrect decisions.

These information systems transform raw data to useful information that can be used for decision making.

Advantages of IT in business

Office Automation: Computers are used in organizations to manage information and automate basic processes.

Communication: IT has made it easier to communicate with customers, suppliers and employees.

Business Analysis: Business Analysis is aimed at providing solutions to various complex business problems. IT can suggest various tools and techniques as a solution based on the problem.

Better organized data: IT has made it easier to organize and compile data at one place and make it available to its various users as per their needs. Ex. Excel sheets can be used for compiling vast financial data.

Reduction in Cost and Productivity improvement: (Separate points)

Data is available at one place

Automation of repetitive tasks

Faster and more accurate problem solving

Reliability of information

Speedy results

IT in functional areas of a business

Finance & Accounting

Financial software handle information pertaining to

Daily entries of sales

Purchases

Salary disbursements

Etc.

Ex. Tally is used for journal entries and the preparation of financial statements.

Enterprises use various other software for payroll, billing, budgeting, etc.

Human Resource Management

IT tools (HRM software) are used for Human Resource Management (HRM)

Recruitment

Requesting resumes

Conduct aptitude tests

Interview candidates

Daily attendance

Maintaining employee information

Compensation management

Performance appraisal

Employee exit

Saves unnecessary human effort as well as costs on paper work.

Marketing

Development of IT and communication facilities has sparked a revolution in the marketing field.

IT has provided wings to marketing

Companies can now use digital marketing and CRM (customer relationship management) software to reach potential customers.

Digital Marketing

The promotion of products through digital channels such as

Social Media: Facebook, Twitter, Instagram

Mobile Phones: SMS and MMS

Television and Radio: Video or audio ads

Electronic Billboards

CRM

It is a tactic to manage a company's relations with current and potential customers.

Objectives:

They store data about current and prospective customers.

This information includes data about:

CRM also helps in sales forecasting

Customer retention

Increasing sales

Improving customer service

And thereby increasing profit

What products the customers buy?

When do they buy?

How much quantity do they buy?, etc.

Sales

Technology drives sales growth by increasing market penetration

It enables automatic order placement.

Ex. Swiggy, Amazon, Myntra, etc. are online platforms that enable convenient order placement via a laptop or smartphone.

Companies use ERP software to manage

customer inquiry handling

pricing control

order control

sales invoice processing

It is integrated with other resource planning software solutions used by firms.

E business vs E commerce

E-Business refers to performing all type of business activities through internet.

They have the term e in common. e = electronic

E-Business is a broad concept and it is considered as a superset of E-Commerce.

It involves the use of internet, intranet or extranet.

It requires the use of multiple websites, CRMs, ERPs that connect different business processes.

It includes activities like

E-Commerce refers to the performing online commercial activities, transactions over internet.

E-Commerce is a narrow concept and it is considered as a subset of E-Business.

It involves mandatory use of internet.

It usually requires the use of only a website.

It includes activities like

Procurement of raw materials/goods

Customer education

Supply activities

Making monetary transactions

Buying and selling products

Buying and selling products

Making monetary transactions

Over the internet

Scope of E- Business

Reasons for increasing scope of E-Business

Increasing number of 3G / 4G mobile internet and smartphone users

Need for automation

Reduction in cost of internet facilities

Provision of online banking facilities

E-Business refers to performing all type of business activities through internet. It involves interaction between several parties. Here are the parties involved.

Business to Business (B2B)

Electronic exchange of products, services or information between businesses.

Ex. Exchange between manufacturer and wholesaler, retailer to wholesaler or vice versa.

Activities included

Inquiry about products

Placing orders

Making payments

Making complaints about the product or service

Business to Consumer (B2C)

A financial transaction or online sale between a business and consumer.

It involves the sale of a product or service from the business to the consumer.

Activities included

Product or service inquiry

Placing the order

Making payment

Giving Feedback

Types of B2C sellers

Direct Seller:

People buy goods and services directly from the seller.

Manufacturers may set up online versions of department stores.

Ex. Nike sells its shoes on the Nike website

Online Intermediaries:

These intermediaries don't create their own products or services but act as a common platform for buyers and sellers.

Ex. Makemytrip connects tourists with members of the hospitability business.

Community based:

Web communities such as social media platforms help marketers and advertisers reach customers.

Users see content (advertisements) based on their interests and preferences.

Ex. Facebook, Instagram and Twitter

IntraBusiness

Parties performing the economic transaction are within the business firm

Electronic exchange of information helps integrate departments

Ex. Marketing demand assesses demand --- Production Department --- Procurement (to get raw materials) --- Finance (get funds)

IT enabled communication via the intranet saves time and cost

Intranet: An intranet is a private network accessible only to an organization's staff.

To facilitate business processes, firms use ERP software that allows for better integration.

Consumer to Business (C2B)

This is a transition from the traditional B2C model.

Examples include:

Reverse auctions, in which customers quote the price for a product or service they wish to buy. Ex. eBay

Influencer Marketing: Business pays a fee to be promoted on the customer's social media / blog.

E-business can also be found in the following industries:

Banking

Insurance

Travel Services

Recruitment Services

Online learning

Online Entertainment

Online Shopping

Online Publishing

Merits of E-Business

Lower costs:

Lower transaction costs

Saves paper and stationery costs

Cheaper than traditional business models

No need of purchasing and maintaining a physical space

Saves cost on recruitment, less people needed (No need of hiring and training store staff)

Only cost = hiring a person who is proficient in technology and has computer skills.

Time saving:

Saves time of customers and business

Customer doesn't need to visit store

Faster communication between customer and business

This helps in quicker decision making

No physical restrictions:

No geographical boundaries

Anyone can order anything from anywhere at any time.

Eliminates place and accessibility issues:

Stores are only open for limited hours

With e-business, customers can place their order anytime

This makes it easier to conduct business across time zones.

Lower barriers to entry:

The internet doesn’t distinguish between small and large firms.

They have similar opportunities over the internet

This promotes competition and results for a better product for the customer.

Acts as a low-cost advertising medium:

Online advertising is one of the cheapest options out there.

Ads can be placed on sites like Instagram and Facebook.

This has the added benefit of sending targeted ads to people. This results in a higher chance of purchase.

Demerits of E-business

Lacks personal touch:

It takes away the human touch

Some people prefer talking to salespeople and understanding the product.

Virtual businesses cannot provide that human element

Security issues:

To perform an online transaction, a customer has to share various details such as name, phone number, address and bank details.

The safety of such information is threatened due to rampant hacking.

Digital payments are prone to online banking frauds.

Internet Connectivity:

E-business requires constant internet connectivity

This may not be available in remote and rural areas

Not having access to the internet also prevents online transactions

Moreover, businesses need to have access to a strong internet connection to run effectively and avoid delays in processing orders and payments.

High Initial Costs:

Preliminary costs include

Installing an internet connection

Purchasing hardware

Purchasing software

Setting up the entire system

Maintainance

Highly competitive:

The E-business marketplace is flourishing quickly.

Established firms need to work hard to maintain their position as more and more players enter the field.

A firm's position will depend on the way products are displayed on their web portal and all the accompanying services provided.

Dearth of skilled manpower:

Firms are facing a shortage of manpower who can continuously update the internet facilities and webpage.

Webpages require frequent changes

With so many E-businesses popping up, there is a shortage of staff that can take care of these technical needs.