ICT APPLICATIONS IN BUSINESS
Tina Elizabeth Varghese
S1 MBA IB,
Roll No. 30,
School of Management Studies,
CUSAT, Kochi- 22.
E-mail: [email protected]
Abstract: This paper is on Information communication technology in
business applications. ICT can be used in various fields in business like
marketing, manufacturing, selling, travel and tourism, banking, health, e
commerce, government to business, research and development etc. ICT
has made information flow in these fields very easy and fast. Any
company that has introduced ICT has stepped forward for advancement.
Information which is the most important factor in business is passed
through proper channels of technology like telephone, internet, fax etc to
the other end for fast and correct response.
Keywords: ICT, Business, e-commerce, CIM, JIT, CAD/CAM, EDI, EPOS,
G2B.
INTRODUCTION
ICT is the Information Communication Technology whose accessory
mainly consists of computing (hardware and software) and telecommunication (mobile,
fixed and internet).
ICT was introduced in business in 1960s. At the time, mainframe
computers dominated the information technology and brought back the trend to centralized
hierarchical business structures in which information stored in the system was only made
available ‘downwards’ in the organization on a strictly ‘need to know’ basis. But by 1980s
networked personal computers and workstations, it has become a ‘downsized’, ‘client
serving’, ‘collaborative’, ’ workgroup computing ‘, structure of business and an employee’s
position is more a reflection of expertise than a matter of seniority.
The effects of information technology on a business organization
depends on a wide range of factors, including the nature of the industry or industries in
which business operates and the goods or services which the business produces for sale.
It will also depend on the range of activities to which the business seeks to apply
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information technology and the extent to which the organization is consciously
implementing an ‘IT strategy’ across all activities and aspects of the business. If a
networked PC system is introduced without a proper implementation strategy on top of
existing and traditional work practices, it may simply encourage employees to ‘dump’ lots
of meaningless files on the shared data storage facilities to which the network gives them
access. The end result is a huge data ‘dustbin’ full of largely useless information. To avoid
such inefficient t results, companies need to change their institutional culture as well as
their technology when they introduce computer systems.
The implementation of new computer systems within an organization
can often affect department responsibilities and ‘who does what job’. Staff levels, job
descriptions and job grades may all be subject to change. Additional demands will be
placed on the managers and employees who are expected to cope with the change. There
may naturally be some resistance to change on the part of workers and managers when
new IT systems were first introduced, reflecting their fears of loss of status and job
security, or their worries about whether they have the ability to learn how to use the new
system. A suitable system of training and support, based for examples on workshop
activities, should therefore always accompany the introduction of new IT systems which
are likely to affect organization structure or work practices n a significant scale. It is also
important to maintain communication and consultation with all those affected. A common
failure during the implementation of a new IT system is a breakdown of communication
between those affected.
INTERNAL AND EXTERNAL APPLICATION OF ICT IN BUSINESS
The internal application of informational technology involves the use of
information technology to assist, organize or automate business tasks undertaken within
the business organization. By contrast, the external application of information technology
relates to a business using information technology in its dealings with outside or external
agencies such as customers and suppliers. Amongst the internal application of information
technology are accounting systems, management information systems (MIS), decision
support systems (DSS), electronic office systems and computer aided design and
manufacture (CAD/CAM).
Among the external applications the most important development is that
of the electronic data interchange (EDI) systems.EDI is the electronic transfer of business
information, with the information being sent in a format that conforms to certain standards.
EDI introduces the possibility of ‘paperless’ trading and promises the end of repetitive form
filling, stock orders and other forms of ‘paper shifting’. EDI is predominantly used between
large business customers and their suppliers. Like in manufacturing industry, banking and
financial industries etc. In banking and financial industries, EDI and related applications of
IT are revolutionizing the entire system of moving funds, encouraging the emergence of
global or fully internationalized money and securities markets in which the electronic
transmission of funds is fast replacing ‘paper-shifting’. In another 30 years, in an almost
‘cashless society’ , most transactions to do with borrowing, paying, receiving, depositing
and moving money will probably be done on wallet size personal communicators.
Electronic data interchange (EDI) must not be confused with electronic
mail systems. International e-mail systems are fast growing into credible business tools
that enable businesses to communicate cheaply and efficiently around the world.
International e-mail, whereby a message appears directly on the computer screen of the
individual being contacted, can eliminate hours of time otherwise wasted trying to establish
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telephone contact elusive corporate executives. E-mail also side – steps busy facsimile
machines and increases the ease of communicating across time zones. But until quite
recently, international e-mail suffered disadvantage of a plethora of a non standardized
systems that could not easily communicate with each other. However the recent
development of the internet system, now allows users of different e-mail systems to start
talking to each other. Internet has been described as a ‘networks of networks’, resembling
a computer network cooperative. And developments in ‘video conferencing’ via personal
computers and the telecommunication system, means that companies can arrange
‘electronic meetings’ between executives and business partners in different countries. The
growing use of video conferencing will reduce dramatically the amount of time and money
spent by business executives travelling between subsidiary plants and offices located in
different countries and continents.
In recent years, image – invoking terms such as the ‘paperless office’
and the information ‘superhighway’ have been coined to describe some of the ways in
which the use of IT may transform business activity over the next few years. The term
‘paperless office’ is self explanatory, relating to the ways in which electronic
communication and data storage reduce the need for print outs, both internally within a
business and externally when a business communicates with its customers and suppliers.
Development in telecommunication technology, particularly in fiber optic cables which are
capable in carrying a myriad of electronic messages without contamination or
deterioration, create the possibility of an information ‘superhighway’ along which business
information can be transmitted. This will be significantly useful for businesses. In the
retailing, media and entertainment fields, speeding the development of electronic ‘home
shopping’ (and banking) and the interactive communication between a business and its
customers. In the near future, households will be able to use their computer terminals to
buy goods from ‘electronic catalogues’, pay bills and order customized feature films or
computer games which will be delivered electronically via the information ‘superhighway’
into their living rooms.
ICT APPLICATION IN MANUFACTURING
Computers were first applied to manufacturing on a significant scale in
the 1960s. The second generation mainframe computers in use at the time were suitable
for data processing but not for controlling factory equipment. Manufacturing resources
planning (MRP) one of the first attempts to use computers to aid manufacturing. Originally
known as’ materials requirements planning’, MRP used mainframe data processing
computers to speed up the main aspects of the pre-production paperwork entailed in
manufacturing. MRP generated purchase orders for the supply of raw materials and
components, and works orders instructing workshops to undertake manufacturing
operations to meet orders. By the late 1970s, MRP has developed to cover the entire
manufacturing planning process, integrating production and the financial side of the
business. Also by the 1970s, computers were able to control industrial processes and
machinery, but computer-controlled devices worked independently of each other as
separate ‘islands of information’, and were linked together by manual control rather than
through the application of IT. During this decade the technology used in modern
manufacturing automation was developed, including ‘computer-numerically-controlled’
(CNC) robots and machines,’ computer-aided design and computer based statistical
quality control techniques. A CAD package uses IT to do for drawings what word
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processing does for text. Designs produced by CAD in the company’s drawing office are
sent electronically to the factory’s machines in the workshops. With the development of
computer-based quality control systems, computers could signal when production was
deviating outside acceptable tolerance limits, but manual control was still needed in the
1970s to stop the process and rectify the fault. By contrast, the 1980s became the decade
of connectivity whereby networking enabled many of these computer-controlled
manufacturing tasks to be linked together electronically in a way that had not been
possible before, largely because of the previous lack of agreed standards. Finally, the
1990s has emerged as ‘the age of communication’ resulting in the connectivity between
separate organizations.
‘Virtual reality’ is an extension of the technology used in CAD; VR
creates the illusion of being inside a three-dimensional structure such as a building or a
car. VR is becoming a significant business tool in fields such as product design and
marketing.
‘Just-in-time’, also known as ‘continuous flow production’ or ‘kanban’, is
one of a group of techniques pioneered by the Japanese which have become associated
with Japan’s reputation for manufacturing quality. JIT requires that parts and components
are only delivered to the production line or to the next stage in the manufacturing process
when they are needed. There is no build up of stock or work in progress and no progress
chasers. The essence of JIT is communication. It is easy to think JIT as a stock control
system and helps to stop mass production and storage without sale.
Another feature of IT in the internal organization of production within a
business is a trend to the ‘global shop floor’. Many organizations known as multinational
businesses- operate factories and subsidiaries which are geographically dispersed on a
worldwide basis as well as within their country of origin. Such companies increasingly use
CIM to link production processes carried out in their different plants in the different
countries in which they operate.
ICT AND BUSINESS RELATIONS WITH ITS CUSTOMERS AND MARKETS
The combination of EDI,JIT and manufacturing technique such as ‘lean
production’ are also making it possible for huge manufacturing firms to respond to the
needs of individual final consumers in a way that was not possible before the IT revolution
rendered its changes on the organisation of production. For example , in all its key
markets, the automobile manufacturer, Nissan, now takes just 48 hours from the time an
order is received to deliver to a dealer a car which is’ customized’ to the exact
requirements of the motorist placing the order. Nissan has pioneered the concept of ‘Sell
One, Make One’ (SOMO) whereby no car is manufactured until it is ordered.
Electronic trading has become the norm for supermarkets and other
retail stores in their relations with the suppliers. In the UK, the supermarket and the
superstore retailer, Tesco, has been the leader in this respect- dealing with well over 1000
suppliers across computer networks using EDI-but most other large supermarket and
retailing groups are fast catching up. Introduction of EDI and related EPOS (electronic
point of sale) information about each item being sold can be instantly transmitted to the
company’s central warehouse, has vastly reduced the amount of stock the retailers need
to keep in stock. Stock is now kept in large warehouses in low rent area but well
connected to the retailing shops through roads. Thus lot of space can be conserved in the
retail shops of high rent. This also enables delicate and highly perishable goods to enter in
good condition and at the right time. The suppliers can also be paid earlier than before by
the process of electronic invoicing.
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Data- warehousing is a recent development affecting a business
relations with its customers. Retailers issue loyalty cards to their customers. Loyalty cards
are attractive to the customers because they enable the shoppers to obtain discounts,
repayments, discounts etc. They are attractive to retailers because they allow store groups
to collect detailed information about shopper hobbit. This is useful for marketing research,
new product launch, to find out potential customers and target markets.
ELECTRONIC COMMERCE USE ICT
ICT and e-commerce offer benefits for a wide range of business
processes. At firm level, ICT and its applications can make communication within the firm
faster and make the management of the firm’s resources more efficient. Seamless transfer
of information through shared electronic files and networked computers increases the
efficiency of business processes such as documentation, data processing and other back-
office functions (e.g. organizing incoming orders and preparing invoices). Increasingly
sophisticated
ICT applications such as KMS (Knowledge Management System) and
ERP (Enterprise Resource Planning) allow firms to store, share and use their acquired
knowledge and know-how. For example, customer databases with a history of client-
specific correspondence help managers and employees to respond more effectively to
customers. A company-wide electronic data source aims to disseminate employees’
professional experience, for example tips for winning a contract.
At inter-firm level, the Internet and e-commerce have great potential for
reducing transaction
costs and increasing the speed and reliability of transactions. They can
also reduce inefficiencies resulting from lack of co-ordination between firms in the value
chain. Internet-based B2B interaction and real-time communication can reduce information
asymmetries between buyers and suppliers and build closer relationships among trading
partners. In fact, adopters of e-commerce tend reduce transaction costs, increase
transaction speed and reliability, and extract maximum value from transactions in their
value chains.
ICT IN TRAVEL AND TOURISM
The travel and tourism industry has been heavily affected by ICT
applications. The Internet, in particular, has been useful in many regards to the travel and
tourism sector. It is used to provide multimedia information about destination to
prospective travelers. It also affects auxiliary industries, such as the transport sector,
which plays a major role in the tourism industry. With the aid of ICT applications,
prospective travelers can view a destination, book accommodation, book the flight and
other forms of transport and pay for all these without leaving their homes. The use of ICTs
has permeated the travel and tourism industry. ICTs in this industry consist of various
components that include computerized reservation systems, teleconferencing, video, video
brochures, management information systems, airline electronic information systems,
electronic funds transfer, digital telephone networks, smart cards, mobile communication,
e-mail, and Internet. These various communication technologies are being used in all
sectors travel and tourism industry and related sectors.
ICT FOR GOVERNMENT TO BUSINESS
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Various steps have been undertaken by the government in developing
countries to bring forward new business enterprises and to expand the existing ones. Take
for example the Singapore government, they have undertaken steps like, EnterpriseOne-
one network for enterprises is a multi agency initiative managed by SPRING Singapore.
This helps local enterprises to find the answers about questions relating to how to start,
sustain and grow their businesses. The team conducted surveys, focus groups and one-
on-one usability tests gathering more than 500 responses. This is after understanding the
organizational needs of the local enterprises.
Local and international businesses can now access and utilize a full
suite of aggregated and integratedG2B information and services through an intuitive
interface. For easy navigation, Business Town e-services are presented in terms of a
business life cycle commencing from business planning, market research, intellectual
property management, right through to exit strategies.
It provides conveniences for all business users as a one-stop license
application centre. It also allows single integrated form for multiple licenses, to multiple
agencies. Immediate, automated status updates are available via email. As a result, a lot
of business processes between businesses and the government are streamlined, saving a
lot of time and money along the way.
Government electronic business (GeBIZ)is another way of government
encouragement of business using ICT . Government Electronic Business (GeBIZ) at
www.gebiz.gov is an integrated, one-stop online business centre where GeBIZ Trading
Partners (GTPs) can conduct transact electronically with the entire public sector. With
GeBIZ, GTP can find all the business opportunities offered by all government agencies on
a single portal.
Government agencies are now using electronic tenders and quotations
published on GeBIZ as the default means of procuring. Firms who wish to participate in
these business opportunities will have to be GTPs to submit their electronic bids through
GeBIZ.
GeBiz enables Service-Wide Online Procurement as well. Online
procurement enables enterprises to lower operational costs and gain wide access to a
global supplier base. The public service intends to be a flag bearer for e-procurement to
catalyse the penetration of e-commerce in the private sector. An integrated end-to-end
government e-procurement system was launched in December 2000.
The Government Electronic Business Centre (GeBiz) provides local and
international suppliers easy access to procurement opportunities in the Singapore public
sector, allowing them to trade with the Government electronically. GeBiz also enables
public officers to perform a full spectrum of procurement activities online. When fully
deployed, GeBiz will serve to bring buyers, suppliers, tenderes and bidders into a
common, secured, round-the clock forum for procurement and tender activities. It will also
provide better information management of statistics and purchasing patterns as well as
fund management through seamless interfacing with financial systems.
ICT IN OTHER ALLIED FIELDS OF BUSINESS
In employment - Screening tests for large number of candidates. Enable
physically challenged and females to work without coming to office. Employment sites that
serve employers to select apt candidates and vice and vice versa.
In agriculture- At the micro level, ICTs applications can be used to
impart information directly to farmers and the farming community. There are expert system
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designed to handle agricultural issues such as water utilisation and management, pest
control, harvest management and so forth.
In research and development- ICT helps in sharing of knowledge, doubt
clearance, updating knowledge, coordinating works which are geographically distributed
etc.
ICT finds application also in health, environment, etc.
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