Impact of IT in Org and Market

7/29/2019 Impact of IT in Org and Market

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Impact of IT on organizations and

markets

Megha U

S4 MBAISMS


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Information technology (IT) is dramatically

changing the business landscape. Althoughorganization cultures and business strategies

shape the use of IT in organizations. IT

significantly affects strategic options andcreates opportunities and issues that

managers need to adopt in many aspects of

their business.


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Objectives

Understand the impacts of IT on organizations

and organizational performance at several

levels

People

Processes

Products

Overall performance


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Why Firms adopt IT?

Retaining expertise of employees.

Enhancing customers satisfaction with thecompanys products.

Increasing profits or revenues.


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Impact on Employee

IT can facilitate employee learning.

IT also causes employees to become moreflexible, and enhances their job satisfaction .


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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


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Impact on Employee Job Satisfaction Recent study found that in organizations having

more employees sharing knowledge with oneanother, 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


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KnowledgeEmployee

Learning

Knowledge

Management

Sys

Employee

Adaptability

Employee

Job Satisfaction

How IT Impacts People


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Impact on Processes

IT enables improvements in organizationalprocesses such as marketing, manufacturing,accounting, engineering, and public relations

These impacts can be seen along three majordimensions

Effectiveness Efficiency

Degree of innovation of the processes


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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.


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Impact on Processes

Impact on Process Effectiveness

IT can enable organizations to become more effective byhelping them to select and perform the most appropriate

processes.

IT enables organizations to quickly adapt their processes

according to the current circumstances, thereby maintainingprocess effectiveness in changing times .

Impact on Process Efficiency

Managing knowledge effectively can also enableorganizations to be more productive and efficient

Impact on Process Innovation

Organizations can increasingly rely on knowledge sharedacross individuals to produce innovative solutions to

problems as well as to develop more innovative

organizational processes


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KnowledgeProcess Efficiency Productivity improvement

Cost savings

Knowledge

Management

Process Innovation Improved brainstorming

Better exploitation of new ideas

Process Effectiveness Fewer mistakes

Adaptation to changed circumstances

How IT Impacts Organizational

Processes?


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Impact on Products

Impact on products can be

Value added products

Knowledge based products

Knowledge Value-added Products Knowledge-based products

KnowledgeManagement


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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


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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


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Impacts on Organizational

Performance

Direct Impacts

Knowledge is used to create innovative productsthat generate revenue and profit

Indirect Impacts Use of IT to demonstrate intellectual leadership

within the industry, which, in turn, might enhancecustomer loyalty

Use of knowledge to gain an advantageousnegotiating position with respect to competitorsor partner organizations


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Information Technology Services

Figure 3-6


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Transforming Organizations

Corporate change must be planned and managed

Organizations may have to struggle with different

experiments and learn from their mistakes

Technology and organizational learning:


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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 andoutsourcing whatever work they can,to

countries where wages are significantly lower.


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Flattening Organizations

Figure 3-9


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Impacts of IT onBusiness 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 (usuallycustomized). Once the order is paid for, the vendor starts to

fulfill it Real-time demand-driven manufacturing.


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Changes in theSupply Chain


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Impacts on Finance and Accounting

E-markets require special finance and accountingsystems. Most notable of these are electronicpayment systems


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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.


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Impacts of IT onMARKETING

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


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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, televisionads, banners and web pages.


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Money back rebates - : Consumers are offereda part as money back if the receipt andbarcode are mailed to the producer.

New Media - This is where websites andmobile phones surrport sales promotion. Forexample individual codes on the packethelping the consumer to enter the code intotheir website to see if they had won a prize ornot.


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Impact of IT in Org and Market

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