Defining Information Technology (IT)
Discuss about the Information Technology and its impact on Firm Performance.
“Information technology is the technology which involves the development, maintenance and utilization of computer systems. It is also concerned with the use of software and networks for the processing as well as distribution of the data”. Information technology has several benefits which are utilized in human lives. It prevents any sort of error, it is responsible for decreasing the amount of paper work, it is responsible for faster creation of products and helps in saving more and more time and also helps in accessing information in a manner which is easy and proper enough for use. The statement which is discussed here is “Information technology and its positive impact on firm performance”.
Information technology has also been seen to consume a lot of energy and this is because of which our lives get shortened considerably. The lives of humans have become more and more comfortable due to the use of information technology and the advancement in technology because of the fact that information can be easily accessed and this helps in saving a lot of time. This has negative impacts as well as it contributes to the laziness of a person. It often happens that children instead of understanding their tasks or learning properly aimlessly use the information which is easily available on the internet. This harms their overall development and they are not able to understand the things which are crucial for their respective survival. Information technology is being blamed for the lessening importance of books in the lives of the human beings (Liao et al., 2013). The most valuable impact of technology which is significant in the present world is that on “firm performance”. The introduction of the idea of information technology has become a necessity in order to remain suitable and competent in a majority of industries. This leads to the fact that the simple implementation of the IT as a suitable tool of use is not enough in order to achieve a better and significant firm performance. There are several factors which help in the understanding and influence on the performance of the firm. This helps in the overall achievement and understanding of the development of a firm (Wu, Straub & Liang, 2015).
A calculation of the performance of a company which not only depends on the efficiency of the company itself but also on the market in which it operates is referred to as the concept of firm performance. There are different financial measures which are utilised to evaluate the performance of a company. Firm performance of any company is important in measuring the success of the company. According to research it has been seen that some people find the information technology to have a constructive impact on firm performance while some find there is a negative impact (Mithas et al., 2012). In the age of IT with the changing environment of work the role of IT has been extremely crucial in increasing and strengthening the competitiveness of the firm in the respective industry. Therefore it is being seen that the firms are increasing their IT investments and in addition to this due to the continuous economic downturn the management requires the IT not only to save costs but also to shape business outcomes. Firms are expected to maintain their business sustainability by maximisation of their profits and the increase in the sales revenue by means of improvement of business processes. The IT deployment can contribute to these goals by the improvement of productivity of the employees and the collaboration among the employees. The companies can communicate better and there can be a suitable collaboration among the employees, partners as well as the customers (Chae, Koh, & Prybutok, 2014).
Benefits of Information Technology
It has been seen that the senior managers of a firm will benefit from the deference of technological investment decisions based on noteworthy expectations which is due to the fact that information is revealed over a period of time. This is also due to the fact that the future trends regarding the volatility of the market and investment costs and benefits are also revealed. At times when the investment decisions are flexible the firm is much more likely to defer the technological management decisions for longer periods of tie in order to maximize the potential for higher payoffs. The higher risk and levels of volatility related to the future benefits from the adoption of technology causes the firm to have a higher amount of return on the investment and this helps in getting higher returns (Oh, Teo & Sambamurthy, 2012). The nature of the debate regarding the nature of the impact of the “information technology” on the performance of the firms is ongoing. In the time of economic recession and regardless of the issues which are controversial the investment in IT has been increasing. It has been seen that the greater quantity of IT investment and market entry time contributes towards the increase in the service quality of a specific firm and the customer satisfaction also increases. Therefore the impact of information technology can be considered to be a positive impact on the businesses.
There is strong positive evidence for the impact of information technology and firm performance. It has been seen that there is a positive connection between information technology and firm performance as the alignment of the energy of the information systems with the business strategy have been found to be a critical element of the IT management. In case the firms are desirable of investing in “IT systems” then the capability advantages and the better amount of achievement of financial performance by better quality of service is also desirable. It has been seen that greater amount of investment in the IT contributes to the increase in the quality of a firm and also the customer satisfaction and the market share (Mithas et al., 2012).
Another positive impact is discussed as follows: With regard to the ongoing increase in the IT investment it is crucial to know what is responsible for making the IT investments pay off. The IT itself does not matter rather the utilization of the IT for the generation of business outcomes is much more important. The analysis of the IT investment and business growth is found to be significant. The firms need to set a priority considering the specific business investments which are likely to bring suitable business outcomes at the time of their investment and need to find a way in which the business outcomes can be generated faster for overcoming the specific situation
(Oh, Teo & Sambamurthy, 2012). However it has been seen that in the long run the other firms also become aware of the benefits which result from the IT investment as there is a major investment on the IT projects. The outsourcing of IT and the consultants’ involvement also helps in gaining more and more skill from working in multiple projects which is responsible for making the cost of IT lower. Therefore in the long run the” IT investment” does not actually drive the performance of a firm in the true sense of the term (Holtshouse, 2013).
The debate is indeed long regarding the impact and the influence of the IT investment on the performance of the firms. There are different schools of thought pertaining to this particular topic. It has been seen that in the early times a better-quality IT infrastructure can create a better firm performance as it is capable enough of differentiating the IT leaders from the others.
References:
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