Impact of Information Technology on Business

Information technology is a wide field, and has enabled organizations across the world to work in an efficient manner. It plays a very important role in effective management and running of a business. The use of IT in organizations is inevitable, be it any type of company like manufacturing or medicinal sector. It has contributed largely to the process advancements in organizations. In this write-up, you will understand the impact of information technology on business.

Basic Elements

Software and Applications

Software is an important part of IT, which relates to computer applications that enable a company to generate, store, program, and retrieve data as and when needed. There are many software developed for different purposes. All operations in the business sector are carried out by software that are assigned for executing specific tasks. Without these computer applications, the trade wouldn’t have been able to carry out their functions in a proper and efficient manner. Operating systems, ERPs, special purpose applications, and web browsers are some examples of different software.

There are some software, which are exclusively built to contribute to the proper collaborative working of all sections of the businesses, which are known as Enterprise Resource Planning (ERP). These are complex applications, which enable people to efficiently manage all functions and operations of all processes.

Hardware Devices

These are various computer equipment that house the software. Devices like microcomputers, mid-size servers, and huge mainframe systems are some examples of hardware. Businesses have to maintain a huge collection of important data. For this purpose, they employ these devices, which are responsible for storing confidential company data and retrieving it back when required. Other hardware devices include network devices that are used for providing Internet access to work and communicate expeditiously. There are even devices, which enable manufacturing tools and equipment to work accurately in the industrial sector.

Influence of IT

Small scale ventures need to buy software packages that would cater to their specific management, operational, and functional needs. For this purpose, they need to approach firms and IT manufacturers who deal in such software applications. Other IT services include Internet marketing and email marketing, web hosting and promotions, and maintaining client networks. Larger ventures, on the other hand, have their own operational and functional employees who develop software applications and work on several IT needs. They usually purchase ERP software to coordinate different processes and functions into a single application, which is actually more convenient.

The manufacturing sector may make use of servers and databases to store their vast data regarding inventory, B2B, B2C, FMCG (in the retail sector), etc. Automobile manufacturers use computers to guide manufacturing and designing tools to function in a precise manner, ruling out the possibilities of any human error. Businesses all around the globe have to take the aid of IT in some way or the other to keep themselves in sync with the market and the world. There are several departments in organizations, such as HR and recruitment, finance and payroll, administration, and security. All these departments utilize IT to carry out their respective operations in a productive manner and efficient manner.

The role of IT in entrepreneurship is certainly of a great importance, which enables businesses to effectively and successfully plan, manage, execute strategies which lead to profit. Moreover, the impact of information technology on business is on the rise, as several advancements are focused on to be implemented in various business processes.

What is Information Technology

The Information Technology Association of America (ITAA) defines Information Technology as “the study, design, development, implementation, support, or management of computer-based information systems, particularly software applications and computer hardware.”

Information, meaning processed form of raw data, is something which is valued very highly in today’s world. A person possessing the right kind of information and using it at the right time, can surely work wonders. From the credit card numbers which we use for shopping, to the confidential bank account details, everything is stored in the form of binary digits in computers. These details can be used or misused depending on what kind of people have authorized or unauthorized access to it. With the help of IT and our increasing dependency on machines, our life has become far easier, but we are more vulnerable now than before.

What is Information Technology?

The term ‘information technology’ (IT) evolved in the 1970s and if we consider a medium or large company providing goods or services, its IT department will be responsible for storing, protecting, processing, retrieving, and transmitting the information. IT is a wide and varied sector, and is represented in some form in almost all the industries. It is a blend of computers and communication technology where IT professionals perform a variety of duties, ranging from development and installation of applications, to designing complex computer networks and databases. The IT industry consists of computers, communication mediums, peripherals, electronics-related organizations, software, and services. Usage of IT for the completion of tasks in any organization, speeds up the processing and information mobility, and also improves the reliability and integrity of information.


Computers: Computers are very important in order to store and process data. Depending on the size, cost, and processing ability, computers are divided into four categories. They are mainframes, supercomputers, minicomputers, and microcomputers (desktops or personal computers).
Servers: A server is a combination of hardware and software, and it provides services to the client computers. These services generally include storage and retrieval of information. A standalone computer can also act as a server, provided it’s running a server operating system.
Database Management Systems (DBMS): Database Management System is basically a set of software programs, which manage the storage, retrieval, and organization of the information in a computer. This information is in the form of a database and is managed with the help of software. The DBMS accepts requests from the application program and instructs the operating system to transfer the appropriate data. There are various departments to monitor the flow of information, which include System Administrators, IT Managers, Database Administrators, and Chief Information Officers (CIOs).
Networking: A computer network is a collection of computers and peripherals connected to each other through different modes. These can be wired or wireless. The network allows computers to communicate with each other (share data and resources like printers, scanners, etc.).
Network Security and Cryptography: Network security is one of the most important aspects of IT. It consists of all the provisions made in an underlying computer network, so as to prevent unauthorized usage of information. It also includes implementing the policies adopted by the government and the applicable cyber laws. It is also helpful in providing protection from computer hacking at the cyber boundaries of an organization.

The cost of transmitting information has fallen dramatically, and according to a study, the cost of transfer of one trillion bits from Boston to Los Angeles has come down from a whopping USD 150,000 in 1970 to merely 12 cents today. With the help of Internet technology, emailing a document of 40 pages from Chile to Kenya costs less than 10 cents, which is nothing as compared to the faxing price of USD 10 or sending it by courier for USD 50. Hence, it can be clearly seen that there are many advantages of IT, and it has drastically decreased the cost of information transfer. It has also increased the efficiency of employees in all organizations, allowing them to focus on core competencies rather than the technological issues.