Technological Changes

Understanding Information and Communication Technologies

Technology has dramatically changed the way we live. Information technologies, transportation systems, food technology, and medical and scientific discoveries affect the way we work, eat, and recreate.

Business organizations have been similarly influenced by technological change and continually influenced by technological breakthroughs. For example, consider how the Internet, Facebook, Twitter, and the mobile universe have changed our lives.

Today people take information and communication technologies for granted. Many devices that we use daily rely on microchips and software to operate effectively.

Today’s electronic treadmills take your pulse as you run, adjust the pace to your heart rate, and inform you of speed, distance, calories, and carbohydrates burned.

Global positioning systems (GPS) route you quickly to your destination and measure the distance you jog or cycle. Upon arrival, you can take photographs that can be published instantly on the Internet over mobile phones.

Information Acquisition and Dissemination

The information and communication technology industries have revolutionized the way organizations operate. Organizations can communicate with their members, suppliers, and customers through devices such as the Internet, smart phones, and tablets.

Information on changing demand for products and demographics is easily accessible, and computers can manipulate information and simulate different scenarios to allow business organizations to make better predictions of the future.

Restaurants use electronic pagers and iPads to inform customers that their table is ready instead of paper menus and wine lists. Airlines use instant messaging to update passenger flight itineraries.

Information and communication technologies accomplish many of the tasks traditionally performed by human beings. For example, eBay prepares shipping labels, packing slips, and invoices.

The eBay Listing Analytics service tracks sales performance and provides performance metrics. As a result, eBay sellers do not have to hire personnel to do the administrative tasks. Instead, they can focus on what they do best: selling.

Air travelers today do work traditionally performed by airline personnel. Airline companies rely on the customer for booking flights, choosing seats, as well as for checking in. Google tracks individuals’ web surfing and tailors ads to the particular user.

Advanced technologies allow organizations to make better quality products more efficiently through automation and precise operations. Manufacturing firms use computer-aided design (CAD) and computer-aided manufacturing (CAM).

Computer-aided design (CAD) Opens in new window allows engineers and designers to create and analyze new product ideas using three-dimensional plans. Car manufacturers such as BMW and airplane manufactures such as Airbus and Boeing rely heavily on CAD.

CAM Opens in new window allows organizations to make products through programmed machines; for example, programmable machines perform welding in the manufacture of cars and insert components in a circuit board in the electronics industry.

Electronic medical records reduce the errors of manual records and allow health-care professionals to instantly access the patient’s entire medical history.

All of these technologies make a firm’s products and services more reliable and safer. The production processes are more efficient as well; fewer mistakes are made in producing goods and providing services, which lowers production costs significantly.

Advanced technologies also enable firms to deliver their products and services timely and reliably. This integration of the supply chain creates value for customers — they get higher-quality products sooner at lower prices.

Being able to download a new tune now, instead of having to go into town and search for the CD or DVD, makes a big difference to the customer who prefers novelty to sound quality.

Information and communication technology systems are often highly integrated. The sale of a book, an insurance policy, or a flight via the Internet will update the relevant company databases instantly. Managers can use this up-to-date information for planning purposes, and for monitoring the execution of their company’s strategy. This creates organizational value.

BCM Kosmetic, part of Alliance Boots, is the largest health and beauty contract manufacturer in Europe, including production of about one-third of Boots products. Its production facility in Ditezenbach, Germany, for example, uses such an integrated approach to the manufacturing of its cosmetics.

Employing computer-integrated manufacturing (CIM) Opens in new window, BCM Kosmetik ties its reporting system to the marketing and scheduling systems to provide current production and inventory information. The systems feed data into a database that many users can access simultaneously.

Using real-time information, employees can continually monitor quality, and react quickly to design changes and market demand. The system is also linked to the firm’s regulatory obligations, as cosmetics are subject to government regulation.

Successful organizations must recognize the advantages of greater access to information. A survey of investment managers reported that their firms’ accounting systems were outdated and not adapting to new technologies. Of the investment managers surveyed, the majority indicated that their legacy systems contributed to human error and reduced competitiveness.

Firms needed to react to customer demands, risk management, and, particularly, regulatory requirements to adopt state-of-the-art systems. For example, retail banking firms, such as Commonwealth Bank of Australia and Royal Bank of Canada, have installed complex software systems to improve customer service, including mobile applications, while improving internal information related to client profiles and preferences.