value of information technology

7/27/2019 Value of Information Technology

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Value of information technology

For business Activities

Hamilton Setende

All rights reserved

Hamilton Setende

2013


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Contents

1. Introduction................................................................................................................................... 1

2. Background To the Research Problem ....................................................................................... 1

3. Problem Statement........................................................................................................................ 2

4. Aims of the Research .................................................................................................................... 3

5. Research Questions ....................................................................................................................... 3

6. Hypothesis...................................................................................................................................... 3

7. Scope of the Study ......................................................................................................................... 4

8. Methodology Outline .................................................................................................................... 4

9. Broad Overview of the Research ................................................................................................. 4

10. Research Value.......................................................................................................................... 4

CHAPTER 2 ........................................................................................................................................... 6

2. Literature survey ............................................................................................................................. 6

2.2. Does Information technology matter ......................................................................................... 6

2.2. Managing information technology for business value ............................................................... 7

2.3. How Information and technology provides competitive advantage. ......................................... 8

2..3.1. What is competitive advantage? ........................................................................................ 9

2.3.2 How to use IT to create competitive advantage ................................................................. 9

2.4. Role of the Chief Information Officer ....................................................................................... 11

2.5. How Information technology supports the business and its activities ..................................... 11

2.6. Advantages of information technology to businesses and its employees................................ 12

2.8. How Information technology help a business to be more productive ..................................... 14

2.9. Advantages and disadvantages of Information Technology in decision making ..................... 14

2.10. Advantages of using Information Technology for Employment .......................................... 15

2.11. Advantages and disadvantages of Innovative Information Technology .............................. 15

2.13. Conclusion ............................................................................................................................... 16

CHAPTER 3 ......................................................................................................................................... 17

RESEARCH METHODOLOGY .............................................................................................................. 17

3 Introduction .............................................................................................................................. 17

3.1. Research Methods ...................................................................................................................... 17

3.1.1. Qualitative research............................................................................................................. 17

CHAPTER4 .......................................................................................................................................... 24

RESULTS AND FIDINGS ................................................................................................................... 24

4. Introduction............................................................................................................................... 24


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4.2. Demographic Study ............................................................................................................ 24

4.2. Questionnaire ...................................................................................................................... 24

4.2.1. ClosedEnded Questionnaire................................................................................... 25

4.3. OpenEnded Questions ................................................................................................ 29

CHAPTER 5 ........................................................................................................................................ 32

CONCLUSION AND RECOMMENDATIONS .............................................................................. 32

5.1 Introduction................................................................................................................................. 32

5.2 Conclusion ...................................................................................................................................... 32

5.2.1 Reliability............................................................................................................................. 32

5.2.2 Competitive Edge................................................................................................................. 33

5.2.3 New Businesses Opportunities............................................................................................. 33

5.3 Recommendation................................................................................................................. 33

ANNEX A: QUESTIONNAIR........................................................................................................... 34


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Abstract

This research project LVaimed at exploring the Value of Information Technology in

Business Dctivities. The primary focus of this study is to determine how Information

Technologies contribute to an organizations performance and how it can provide competitive

advantage.

The research also at the extent to which Information Technology has taken over business

activities and if businesses get value from the use of Information Technology.

The research was conducted by reviewing related previous research work done and also using

different research Techniques like interviews and questionnaires which includedparticipants from different industries.

It was found out that Information technology plays a big role in business activities.

However, this also comes with need of experts and specialists to use this technology as well

as training of the other employees who use the technology in everyday business activities.

The study alsoprovides insight on employees views and opinions on the use of Information

Technology and how it can be improved to help both businesses and employees.


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CHAPTER 1

1.

Introduction

Information Technology (IT) is the use of computers, telecommunications and equipment

to store, retrieve, transmit and manipulate data in the course of a business unit or end-user

accomplishing a goal (sward, 2006).

One of the main reasons businesses deploys IT, is because they improve productivity and

they assist employees in getting their work done.

IT in an organization, functions as support for the other functions or departments in the

organization or business, such as the accounting department, HR department,

manufacturing etc.

The value of Information Technology to Business Activities refers to the potential impact

that IT could have on an organization performance, this includes including increased

profits, increased productivity, reduction on costs, competitive advantage, and other

measures of performance (Devaraj and Kohli 2003; Hitt and Brynjolfsson 1996; Kriebel

and Kauffman 1988).

The value of IT to Business Activities can be evidenced by the following (sward, 2006):

Direct contribution to the companies market position or revenue

Deliverables and results that support solving customer business needs and

challenges.

Cost saving to customers or financial benefits.

Computers and other electronic equipments have taken the World by storm. Information

Technology has made life easier from the use of Cell phones that are used for various

reasons for example communication, cell phone banking, booking travel tickets and

paying utility bills. Laptops are used both at work and home, which has made it easier forsome people to work remotely at home hence saving the company money that would be

spent on renting space for people to work in and also cut down on transport costs.

2. Background To the Research ProblemInformation Technology has become an integral part of our everyday life. In todays

world we can find IT in fields such as industries, medicine, commerce, education and in

our homes. In these days it is rare to find businesses that do not use IT in the running of

their operations. IT services and products have become an important element in how

businesses activities are conducted and as technology improves, businesses become more

and more dependent on the use of IT.


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IT offers the opportunity for high-quality production, increased personal creativity, and

expanded individual freedom. In addition, Information Technology could bring about

significant increases in productivity as complex and time-consuming human functions are

automated.

As technology improves every day, many processes and models have been developed on

the use of IT in a business, such as E- business and E- commerce, whereby business

processes and activities are carried out online, improving the way businesses are

conducted as well as cut costs for businesses since most operations is done online.

The value of IT to business Activities can be measured through the traditional

performance methods such as Return on investment (ROI), but this does not fully capture

the value that can be delivered through IT (Grembergen and Haes, n.d), instead the IT

balance scorecard (BSC) is better to measure tangible and intangible values of IT.

It is a management system that enables a fusion between IT and the business, and it can

also be a great way for effective IT management to report to the board and executive

management about the business value of IT (Grembergen and Haes, n.d).

As Businesses invest more and more on IT just like any other investment they make, they

would like to determine if its indeed providing some form of value to the business.

It is important to identify the link between IT investment and business value and in order

to measure and identify the business value of IT; managers have to answer the followingquestions (Grembergen and Haes, n.d).

What do I get back if I spend extra funds on IT?

How does the IT I possess benchmark against competitor?

Does IT give me back what it promised?

How do past performances help me I learn in order to optimise myorganisation?

Does IT strategy fit with the business strategy?

3. Problem StatementInformation Technology has improved the way companies conduct their businesses

making the business more productive. Work is being done more effectively and

efficiently with the use of Information Technology.

However, with the constant growth in technology every day, this introduces change in

businesses operations. This becomes a problem when businesses and people in generally

do not embrace change which makes it hard to keep updated with technology.


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As companies adopt the use of IT in their business operations, they are also exposed to

risks such as cyber-crimes. These are crimes where computer systems are compromised

by hackers with the use of computer systems. Data can be stolen by these hackers and

used for criminal intent.

4. Aims of the ResearchThe aim of this research is to analyse the values that business achieves from the use of

Information Technology in their everyday business operations.

This research also looks at how IT value in business is measured; how the business defines

and ties profits with the use of IT? This will be answered in the subsequent chapters.

Since Information Technology changes and improves every day, it is important to look at

how people who work with it cop with these changes.

5. Research QuestionsIT services and products come at a very high cost. Companies have invested a lot of

money in their businesses just to have cutting edge technology. IT has taken centre stage

in business operations.

IT is often used to give a company that competitive edge over its competitors and with

IT; certain functions in the business are carried out more effectively.

This brings us to the following research questions:

Has Information Technology taken over business operations?

What advantages do businesses that use IT have over those businesses that do not?

What problems do Companies that incorporate IT into their businesses face?

How is IT value measured in business?

6. HypothesisIt can be strongly agreed that Information Technology is the way to go. It has definitely

provided more good than harm and shaped a lot of todays business operations. Business

operations are done online, there is been real time operations also done which in return

has made life easy for both those providing and receiving business services.

With all this said, it is also important to note that Information Technology products and

services come at both high price and risk. IT is very expensive both to acquire but also

requires expenses to monitor and maintain it. IT is risky in that people are always

targeting operations done online or cell phones and hacking into Business Information

Systems.


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7. Scope of the StudyThis research focuses on how businesses get value from the use of Information

Technology. These values may be tangible and or intangible for example, use of portable

computers and real time availability of product information in market shares respectively

to help decision makers.

8. Methodology OutlineThis research employs two types of research methods: Qualitative and Quantitative

Methods. These will be discussed in more detailed in Chapter 3.

Companies that use Information Technology in their everyday business operations will be

analysed to get as much detailed information as possible.

An online survey will be done where a questionnaire will be sent to some employees in

the company that directly work with Information Technology. This will get their opinions

and views about the Business Value of IT.

Interviews will also be conducted so that there is personal (face to face) contact with the

employees who work with Information Technology. This may give different responses to

the online survey since people may prefer conversions in form of interviews to online.

9. Broad Overview of the ResearchThis research looks at how Information Technology has improved businesses today. How

businesses have moved from the Stone Age to the new Age where every business

operation is simplified to fit the customer from shopping online in the comfort of your

home to paying bills still at home.

Taking further look at how business benefit from Information Technology, what is thevalue they get from the use of Technology will be examined. Since there is too much

money spent on acquiring all this Technology surely it should provide value for money.

Activities that were done by human hands have been replaced with technology so that

there is less time consumed no with minimum errors, improved productivity and also less

costs. How does this affect human labour?

10.Research Value


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Information Technology has become part of everybodys life but more widely used by

businesses to expand their horizons in terms of providing products and services to their

customers locally and internationally.

Businesses use services like E-commerce and E-Business where they conduct theirbusiness operations online hence making it convenient for both the organisation and their

clients. It is with such activities that have made IT an essential part of the business

generating revenue for the business.

The value of IT will also be discussed because businesses should get value for money if

they spend that much on IT. The values will be discussed as well as how they are

achieved.

Therefore, this research will explore ways and techniques that organisations can employ

to optimally use IT in their daily operations in order to generate value for the business.

As previously discussed, IT has become a vital aspect of not only the business community

but also non-profit organisations as well the lives of individuals. However, there are also

negative effects and challenges that organisations face in their day to day business

operations such as preserving the privacy of customer data on line, raising awareness

about the value of IT in business.

These challenges will be discussed in more depth in subsequent chapters and look at ways

how such risks and challenges can be managed.


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CHAPTER 2

LITERATURE RIVIEW

2. Literature surveyThe purpose of this survey is to give a brief overview or determine how information and

technology can be valuable to an organization, how IT fits in to the organizations

strategies and how it allows them to be economically competitive and productive.

Special focus on this literature survey will be given to the following topics:

1. Does IT MATTER?

2. Managing information technology for business value

3. Managing information technology for business value

4. Role of the Chief information officer (CIO).

5. How Information technology supports the business and its activities

6. Disadvantages of Information technology

2.2.Does Information technology matterOne question always asked is does IT really matter, how does IT how fit within an

organizations strategy and so create vale?

An article by Carr (2003), states that IT does not really matter. Carr (2003) argues that

technology is only advantageous to the ones that can explore it in the early stages of their

existence. As IT becomes more widely available and through vendor competition, the

prices drop and other factors lead these technologies to become commodities just like

water and electricity. He believes that although IT can be a strategic resource and

provides a way for companies to distinguish themselves from others, they can be

expensive and risky, he thinks it can only be effective if shared thus providing a barrier tocompetition.

While Carr (2003) believes that IT does not matter, the purpose of this analysis is to

prove that it does indeed matter.

Information technology is a critical component to a business growth, as the use of IT

allows for the optimization of work, reduces the cost of products and services, and

increases business productivity, as it allows for the automation of data processing tasks,

which allows a business to serve more customers with less resources (anon, 2007). It

plays a vital role in business activities and its widely used by companies to improve


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communication, provides businesses with scalability and the ability to manage its

processes and its business models

In todays world, most business is conducted with the use of IT; most activities now

involve IT as many of them are now based round computers and IT; its use has become

inevitable, be it any company in any industry.Things that were earlier done manuallyhave been computerized. Managing accounts, transferring of cash, depositing,

withdrawing is no more a tedious task (Nutt, 2010). Businesses use computers to carry

out their activities and store and create their data using computers and with the use of

digital storage, company data is relatively more secure than manual filing as well as faster

to retrieve data.

One advantage of IT is the development of automated systems, it improves organizations

efficiency by reducing the repetition of certain tasks and it allows for a focus on other

tasks that would require more attention by the employees.

Information technology is one of the main drivers of globalization, it has not only broughtthe world closer, but it has allowed the worlds economy to become a single

interdependent system,(Nana, 2009), The internet and intranet especially has changed a

lot about how things are done, it has improved how communication and collaboration

between businesses is conducted, businesses could now have direct contact with its

customers through the use of the internet as well as their suppliers, it also allows for

workers to work way from the office, bringing about convenient working conditions to

workers.

Firms can now even recruit their talent through IT, by using the internet, by advertising

their specific job vacancies and making it available to the right candidates, which in turn

reduces the cost of advertising on the traditional print newspapers etc.

IT with the internet also brought about E-commerce and E-learning, and with E-

commerce businesses are now able to offer their products to a greater audience or market,

eliminating the limitations of regional trading and letting a business expand to other

territories that they could never reach before.

2.2.Managing information technology for business valueCurley (n.d) states that IT assets lead to value by matching business opportunity and

needs with the potential of IT solutions. Business can utilise Information technology andits services to solve business needs and capitalize on opportunities to create an output or

intangible benefits.

He states that IT has a value chain and its main value creating activities are: IT

innovation: this is the process of utilising IT for the purpose of creating new solutions that

can bring about competitive advantage, as well as add value; solution delivery: utilising

the IT innovative solutions and finding a way to turn them into reality, this focuses on

deploying the solutions effectively and at a reasonable cost; and servicing provisioning:

the way these solutions are supported and serviced to support the activities and primary

services of the organization.


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Firms have implemented various types of checks and ways to investigate the value of IT,

in order and they also have implemented the use certain indicators to measure the

performance, they have checks such as IT governance that manages the flow of products

and services, all as ways to manage information technology in order to provide business

value. For example, Hilt and Brynjolfsson (1995) mention that there are three different

measures of IT value: Productivity, Profit and Consumer Welfare.

Productivity- This analysis the difference between the investment in IT (input)and the productive value of that investment (output) e.g.: gross marginal

benefit.

Competitive advantage: Investigates how investment on IT can providecompetitive advantage to a firm. This checks how investment on IT could

increase a firms profits from any other firm in the same industry.

Consumer welfare: Estimates the total benefit that a given purchase offers toconsumers. The consumer surplus created by IT is positive and growing over

time

2.3.How Information and technology provides competitive advantage.Information and technology is the nature of how companies compete, IT is used in many

companies as a way to lower costs and to differentiate, previously in an organization we

could have activities that required repetition and with IT, that has been lowered and

provides advantage for those companies that have those systems.

IT has become an important enabler of business activities in the world today, it is nowconsidered as a driver of companys growth strategy, and in order to for organizations to

attain their missions, goals and objectives, there is some need of an IT strategy that

complements the business strategy.

To understand better the purpose of IT and how it is a valuable tool for the enterprise, we

need to look at their goals and role within the enterprise.

Six major roles and goals of IT (Haag, n.d)

1. Increase employee productivity by reducing time, errors and costs using

2. Enhance decision making3. Improve team collaboration

4. Create business partnerships and alliances

5. Enable global reach all over the world taking into consideration the culture of each

nation or society.

6. Facilitate organizational transformation as the organization evolves and responds to

the ever-changing marketplace.

This is all positive contributions that information technology can contribute to the

business and subsequently provide value to the business and giving new ways for a

business to outperform their rivals.


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2..3.1.What is competitive advantage?Competitive advantage is advantage gained by offering customers greater value, either by

means of lower prices or by providing benefits and services that justifies higher prices.

(Ehmke, 2005)

A business builds competitive advantage by (Gareth jones, Jennifer M. George, 2006):

Increasing efficiency

o Reduce the quantity of resources used to produce goods or services

Increasing Quality

o Improve the skills and abilities of the workforce

o Introduce total quality management

Increasing speed, flexibility, and innovation

o How fast a firm can bring new products to market

o How easily a firm can change or alter the way they perform their activities.

Innovation

o

Process of creating new or improved goods and services that customerswant

o Developing better ways to produce or provide goods and services

2.3.2 How to use IT to create competitive advantageInformation technology is not just a computer application, and businesses should become

aware of its benefits and how IT is able to provide them with competitive advantage over

their rivals.

An organizations success depends on how they can function in the particular industry

they are and how they can gain advantage over their competitors.

Methodologies have been developed, that help companies to devise their strategies, one

of these is thePorters competitive five forces, this five forces not only help companies to

develop strategies to increase their competitive edge, and it can also be used to enhance a

companys competitiveness.

Porters five models is a collection of major forces or 5 factors that could endanger a

companys position in a particular industry. Companies have to analyse the above porters

five forces, find ways of implementing them in order to position or to compete against the

market leaders.


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Source: Michael Porter, competitive strategy (1979)

Copyright 1980 by the free press

Figure 1: Porter's competitive five forces

Bargaining

Power of

Customers

Bargaining

Power of

suppliers

Threat of

New Entrants

Competitive

Rivalry within an

industry

Threat of

substitute

products

Our company Com etin com anies

1. Threat of new entrants:

New products and new technologies

are always being developed and

companies are required to beupdated on the developments in the

IT industry and be able to capitalise

on the developments that are

occurring so to be able to be an early

adopter of future technology that

may provide competitive advantage.

2. Bargaining power of customers:One way to have customer loyalty

and therefore in here information

and technology can be used to createcompetitive advantage by providing

unique and valuable information and

services that require distinctive

change to the customers

organization and so it is becomes

hard for this customers to choose the

competitors products, as it would be

more costly for the customer.

3. Threat of substitute product: IT is a main driver of innovation in businesses, IT

systems are being added into existing systems or models in various industry and so

creating innovation and providing value to this systems, and so at the same time totally

replacing the way of doing things.

4. Competitive rivalry:

Porter further proposed three strategies that a company could utilise by analysing the

factors that influence competitive advantage in their industry. These strategies are the

following:

The generic strategy is made up of:

1. Cost leadership: Businesses can use IT (utilising processes such as automation) to

lower their manufacturing or service costs and so providing their customers with cheaper

products it therefore reshapes the industry and forces the competition to adopt new

strategies and in the end bringing benefit to the customer.

2. Product differentiation: Businesses should be able to work towards developing new

IT systems or features that would differentiate their products and services, this new

features, should also be able to be innovative in a way that they are capable of limiting the

competitions differentiation advantage as wells as to provide products that will cater for a

particular focus market that would provide competitive advantage.


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3. Pursuit of niche products: Businesses should be able to utilise IT to create new

products and services that are unique and that could take them to new markets or develop

a new market in a whole, IT should be able to help the business make changes to their

process that would take the business to a new direction and help to cut on costs, improve

efficiency and create benefit to customers.

So as seen information system is a tool that can be used to provide more efficient

processes that would lead to lower costs for products and services, furthermore it can be

tied to a business strategy and help organizations to attain competitive advantage which is

a fundamental requirement for a business to function in its industry and survive for the

long term.

2.4.Role of the Chief Information OfficerWith the increasing importance of information and technology in the information age, and

how they are an important tool in creating value for a business, there a need for

information technology to be managed in the same way as other business resources suchas people, finance and materials, so information technology need to be managed,

budgeted, evaluated and controlled in order to that it can be of financial use to the

business and create some sort of value that could be beneficial and a major business

resource to create competitive advantage.

The person responsible for carrying out those activities is a CIO. The CIO is a manager of

all IT related activities within the enterprise, he is an IT leader and works directly with

other managerial entities in the business in order to shape the IT direction towards that of

the business. He someone that has necessary business management skills as well as great

understanding for IT and how it should be managed in order to fit the business strategies.

He is responsible for identifying the IT needs of the organization, work closely with the

financial manager in order to device a cost effective budget that will provide this IT

resources to the organization at reasonable cost as well as identifying which resources

require more investment and would be more beneficial to the enterprise and accessing

how well a company spend on Information systems. He should be able to be knowledge

about the spending trends of its competitors and plan accordingly to that knowledge to be

in touch with industry and technological trends.

The CIO is responsible for aligning IT resources and strategy with business and

effectively helps the business innovate, he is responsible for helping to create aninformation and technology culture in the business and contribute to the effective use of

information and knowledge in business units by developing appropriate information,

people and IT capabilities. This requires the CIO to have an understanding of how IT

processes affect the way thing are done in the organization.

So in all the role of a CIO is to deploy IT and control its cost, helping the business to

leverage information and technology in a way that it can be valuable to the business.

2.5.How Information technology supports the business and its activitiesInformation technology is able to provide support for activities in the business such as:(Turban and Volonino, 2010)


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Operational activities (day to day operations of a business such as assigningworkers their tasks etc.), with the use of IT, programs could be used to track

how workers are carrying out their work, they can identify when the workers

have arrived to work, what time they left and what activities they have doneand the amount of work they have carried out, this is helpful in identifying

which workers are more efficient and therefore beneficial to the business and

so can be used to deploy resources to certain areas to speed work etc. or get rid

of workers that are not beneficial to the business.

This system are also used to place orders, such as purchasing orders etc. and

can be tied to an enterprise wide system that enables a business to see all of

their activities and plan accordingly and save on extensive paper work and

effort.

Managerial activities of those activities that are from external nature such as,(providing services to customers, interacting with the suppliers and business

partners).

2.6.Advantages of information technology to businesses and its employeesIT plays a very crucial role in an organizations structures, strategies and processes. IT

has allowed Businesses to work more efficiently and maximize productivity.

Computerized systems are widely used hence it is advantageous to incorporate IT into an

organization. It has allowed organizations to connect functions that were once

disconnected to be connected and bridge the distance between geographical areas andbreak the division between management levels.

IT creates electronic storage systems that protect the companys valuable assets. Storage

systems keep information safe by allowing certain rights such as access, delete, update

and add to only certain employees in the company. Securing, maintaining of customer

files are vital to Business integrity (Graziadio Business Report, n.d).

IT is not just beneficial to the business; it can also be beneficial to those that work in it as

it provides them the ability for these, to conduct their work activates from home or on the

road accessing the companys electronic network (Burke 2012). This makes it easy forpeople to increase their productivity and also cuts costs on behalf of both the company

and the employee that is no renting office space and also no fuel, transport costs. A

November 2000 newsletter published by the Federal Reserve Bank of San Francisco

explains that IT improves a companys efficiency developing automated processes to take

burden off staff members.

In the modern information age, with the advent of the internet, it has become a powerful

tool for businesses in order to add value to their processes and create profit, it has

provided for ways and different avenues where businesses can expose themselves to their

customer, for example, internet provides such and avenue where by businesses can


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advertising their services or products by creating their own website etc., this website

could also be used as a point of sale, whereby customers can acquire the services and

products on a particular business in a convenient way, on the comfort of their home,

through the internet.

Furthermore there are the social networks that are very popular in our days and are

increasingly being used by businesses to create an online presence and therefore connect

with their customers and potential customers, they provide the business with a source of

advertisement and a communication channel with their customers as well as access to

instinct into what people consume etc. as they share their preferences on their networks in

the social networking sites.

2.7.Disadvantages of Information technology (dilip, n.d)As mentioned above, there are many advantages to Information and technology to

businesses, but as it becomes widely implemented, it is imperial to address that its not all

great, there also some disadvantages to the use of information systems. Implementation

and operational costs

The implementation of IT systems can be costly to the whoever is implementing them,

business are sometimes required to pay a license to vendors to use a particular system and

in many cases they are required to pay that license for every of their employees assigned

to work with those particular systems another point on implementation cost is the fact that

for this systems to be implemented, the business requires to train the workers or

employees that are assigned to work on them and so training costs have to be taken into

mind when deciding to implement a particular information and technology system.

Eliminating jobs for Humans

Information and technology helps a great deal in speeding tasks and carrying them

out more effectively, as activities are automated and require less and less human

interaction.

This in turn creates a problem, whereby machines replace humans and so people

lose their jobs, the enterprise loses their certain loyal employees that contribute

greatly to the business as well as eliminating specialized jobs, this also affects the

business in a way that, it loses the human feel and many customers still appreciate

the human touch in the services they would like to acquire.

Security issues

Information and technology systems are vulnerable to security breaches, the fact

that they are still operated by humans, they run the risk of been breached by the

people working on them and sensitive information of a business can leave the

secure walls of the enterprise and to the outside world and can be used by anyone

anyhow.

The fact that many businesses are now connecting their systems on to the internetalso offers the possibility for security breaches as there are individuals out there


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that make their life careers form braking into company businesses and rob or

render them un-operable and subsequently cause loses to the businesses.

2.8.How Information technology help a business to be more productiveInformation technology is transforming the way the business world work. It allows

business conduct their activities in a faster and leaner manner with smarter, more capable

employees. Business and the workers employed by it are more productive than ever

before because of the tool information technology allows them to have (Daniels, 2012).

A business that utilizes information technology in an effective manner is capable of being

more productive, information and technology allows businesses to have make more

accurate sales projection and better control of its inventory, this in turn helps the company

to spend less as it does not require to hold on to inventory that is not required, as well askeep track of inventory losses to such problems as mismanagement and theft, which

allows a company to reduce costs and perform better (Daniels, 2012)

2.9.Advantages and disadvantages of Information Technology in decision making (Vogt,

n.d)

Information Technology can help in decisions that human mind over look. These

decisions may include future v profit numbers which may determine which offices should

remain in operation or close down.

Information and technology can lead to faster decision making, it allows for computers to

make better decisions that that managers or office workers may deem unnecessary for a

human to make. (Vogt, n.d).

Computers can process more work and quickly which humans cannot do. People at work

can get bored or and get tired unlike computers that operate 24 hours non-stop and not get

bored or tired. Computers give more accurate than people, hence these precise results

lead to better decision making.

There is software that helps in decision making matters, examples of these software is

Enterprise Resource Planning (ERP) provides information to lower-level managers to

make decisions without consulting high-level managers.

New Research from Professor Raffaella Sadun, 2010, finds that the answer to decision

making between top, middle and low level managers is through the technology that a

company uses. Computer-Assisted Design and Computer-Assisted Manufacturing

software creates a situation in which the plant worker needs less access to superiors in

order to make a decision.


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There disadvantages also associated with technology making decisions, a good equipped

computer comes with a high cost, there could also be need for programs that the company

will need in decision making, the programmers who write these programs dont come

cheap. There is also a possibility that by the time the computer program is in placetechnology will have changed/ advanced since technology is always changed and the

company will be in need of another type of technology.

Technology has discouraged employee morale, since most work is being done by

computers then managers feel like their decision making skills are being under mind.

Computers are rational while people are subjective, hence using computer rational in

decision making and leaving out the peoples subjectivity may leave out crucial ideas in

decision making process.

2.10. Advantages of using Information Technology for EmploymentMuch as Information Technology comes with its own problems such as security

vulnerabilities, technology has made the employment process quicker, effective and more

efficient.

Technologies have helped companies during the recruitment process. Companies have

websites where job seekers can go and look for careers and apply online. Companies can

then look through the submitted resumes and choose those applications that have

matching skills then contact the applicants for interviews. This has saved waste of timefor face to face interviews that are not productive and fruitful.

Technology has benefited both the employer and employee. Back in the days in the car

manufacturing industry, mechanical assembling was done by human labour. Currently all

the hard labour in the car manufacturing industry is being done by robots while the

human labour does monitoring. This has made the human labour suffer less body injury

from the hard labour.

Gary Shapiro, 2011, suggests that technological innovation helps create new jobs,

markets and industries that never existed before.

2.11. Advantages and disadvantages of Innovative Information Technology (Joseph,n.d)

Information technology advances every day hence this pushes businesses to implement

the latest technology so as to be able to compete with rival businesses. Small businesses

get both advantages and disadvantages from acquiring innovative technology.

Market expansion


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IT can helped small businesses expand through the use of the internet; and allow small or

not so small business to compete worldwide, businesses can run online businesses, sell

their products and services around the world, through the use of the internet and

maintaining an online presence.Cutting costs

Allows for cost cutting as many of the work activities, can be done by automated systems

that could in perform better and quicker than human labour. Example instead of having a

receptionist answering calls, automated systems is made to answer calls hence cutting

down on employee salaries.

2.12. Methodologies and Data analysis techniques for Measuring IT value

One technique for measuring IT value to the business is the Information Technology

Capability Maturity frame work (IT CMF) (Curley, 2006).

This model suggests that when making investment decisions concerning IT, businesses

and its IT organization require carrying out repeated processes that describe the practices

that be used to manage IT and maximize it to produce business value.

The CMF views IT as a production function, the money put into IT investment, is

considered as input and any products gained are considered as being the output.

2.13. Conclusion

After careful analysis of all the literature available on the topic of The Value of

Information Technology to Business Activities it is true to say IT does provide Business

value.

The literature also presents other aspects of the Business that should be well implemented

so as to gain value from the implementation of IT such as employment of well skilled and

experienced Chief Information Officer (CIO).

However, it is also important to note that IT is not panacea for resolving all business

problems and the IT department should be looked at as any other department in the

organization.


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CHAPTER 3

RESEARCH METHODOLOGY

3 IntroductionThere are many methods that can be used to collect data and information when conducting

research and it is important that methods are effective in gathering information that is reliable

and are used to provide answers to the research questions.

3.1. Research Methods

Research Method is a strategy of investigation, which moves from the original assumptions to

research design, and data collection (Myers, 2009).

There are many types of research methods, but for the aim of this research project, this study

will focus on the most common, research methods, which are: Qualitative research and

quantitative research methods.

3.1.1. Qualitative research

It is the study of things in their natural environment, with the goal of making sense of, or to

understand, phenomena in terms of the meaning people bring to them (Denzin, 1994).

It concerns with none statistical methods of investigation and analysis of social behaviour, it

makes use of data collection methods such as: interviews, observations, and case studies

I. Advantage of qualitative research (James P. Key, 1997)

The information produced by Qualitative research methods, are more in-depth

and wide-ranging.

Qualitative research methods make uses subjective information and it involves

the observation of participants, in order to describe the context, or natural

setting, of the variables being analysed, and how different variables interact in

the same context. This helps in developing a wide and better understanding of

the entire situation.

The data collect is subject to less restriction or assumption.

It is useful in conducting exploratory research and hypothesis generation as itsubject to fewer assumptions.


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Does not need a strict design plan before it begins.

Allows for the study of individuals in more depth

Gives the opportunity for the participants to be free and be able to provide

data in their own words and in their own way.

Focuses on small groups.

It focuses on discovering more about peoples experience.

II. Disadvantage of Qualitative research (James P. Key, 1997)

It is difficult to detect or prevent a researchers bias opinion.

Its scope is limited due to the fact that its data gathering methods are required to

be carried out widely and in an in-depth form.

Being that it is subjective in nature, it becomes difficult to determine if the

approach and information gathered can be reliable and validated.

Since it has a focus in discovering about select group of people experiences, it

cant necessarily be used as a way to make assumptions about people outside of

this selected group of people.

Lack of ways to collect statistical data if it is necessary and so requires the

researcher to adopt a mixed methods approach of research whereby qualitative

methods and used in conjunction with quantitative methods in order to overcome

this problem.

2. Quantitative researchQuantitative research is a research method that has the aim, of determining the

relationship between a certain object (independent variable) and another (dependent

variable) in a population (Will G Hopkins, 1998).

Quantitative research is a method of research that involves analysing of data in statistical

or numeric forms (Hughes, 2006),as its name entails it aims to quantify data.


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I. Advantages of Quantitative research (Shuttleworth, 2008)

Allows for analysis and measurement of data.

Provides the ability to study or analyze the relationship between anindependent and dependent variable in detail

Serves as an excellent way of finalizing results and demonstrating or refuting

a hypothesis.

When properly carried on, data collect and results are real and unbiased.

II. Disadvantage of Qualitative research (Jones, n.d)

Requires allot of time to be performed

Expensive to carry out.

context of the study or experiment is ignored

Unlike Qualitative methods, Quantitative research does not study things in anatural environment or neither does it discuss the meaning things have for

different people.

It requires a large sample of the population to be studied in order to produce a

more statistically accurate the results.

11. Difference between qualitative and Quantitative research (Donna Roberts, 2012)

(John D. Anderson, 2006).

Quantitative Research Method Qualitative Research Method

Deal with numbers, with the aim to quantify

data.

Deals with descriptions, with the aim of

making sense peoples feeling to a particular

object.


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Concerned with data that can be measured. Data collected through it cannot be measured,

but can be observed.

Establishes relationships between measured

variables

Understanding a social situation from

participants perspective.

Hard science Soft science

Attempts to generalization, which

subsequently leads to prediction, explanation,

and understanding

Attempts to develop unique patterns and

theories.

This unique patterns and theories help in

understanding highly controlled settings as

well those that are experimental in nature.

The literature review is done early in the

study.

The literature review can be done as the study

progresses or afterwards.Sample size is limited to the selected research

population: Sample size n

There are no restrictions to the size of the

Sample size; seeks "informal rich"

Uses instruments Uses communications and observation

The researcher is separate Researcher is part

of process.

Researcher is separate Researcher is part of

process

The researcher is separate from the wholeresearch process.

The researcher is part of the research process.

Objective in approach, as its aim is to

establish concrete measurements and analysis

of target concepts to answer the research

problem.

Subjective in approach, as its main aim is to

establish a better understanding of human

behavior.

3.1 Sample populationThese are the research participants, people selected to represent the target population to

be used as research subjects.

It is a feasibly impossible task for a researcher to study the whole world population and

so a selected group of that population that meet the sampling criteria of the research

project is selected, in this case individual or companies that utilize IT as means of

improving their companies or organizations activities and subsequently provide value.


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3.2 Data Collection Techniques

There are many tools and techniques that can be used in order to carry out a research

work in order to gather data, for the purpose of this research, the data collection tools to

be used will be: questioners, interviews, and online surveys.

I. Questionnaires

A questionnaire is a list or series of questions and other prompts used in research

so as to collect information from participants.

Questionnaires will be given to people in the industry as to provide feedback on

the topic of business value of Information technology. These questions will help

provide me with what the peoples views, opinions and feelings about the use of

Information Technology in everyday Business operations.

II. Interviews

An interview is used to collect information as well as gain knowledge from

individuals.

Kvale, 1996, regarded interviews as a setting, whereby two individuals trade-off

views on a topic of mutual interest.

Interviews will schedule one on one so to listen and watch the respondent. This is

a much better way to collect data because one gets to see the body language and

expression of the respondent which also conveys a message as well as the

respondents verbal words.

III. Online surveys

Online surveys or questionnaires will be sent online to people who work with

Information Technology in their business operations. This will be less time


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consuming because the questions will be straight to the point and should take a

few minutes. Hence the respondent will not bored by long questions.

3.2 Reliability and validity

Reliability and Validity are fundamental basics to scientific methods, and together; they

are two essential principals relating to what is accepted as scientific proof, by scientist

andphilosophera like (Shuttleworth, 2008).

Reliability means that any significant result obtained in a research must be able to be

repeated and not be a one-off finding. A researcher must be able to carry out the same

experiment at under the same condition and still be able to obtain the same results; this

serves to reinforce the findings and makes it acceptable to the wider scientific community(Shuttleworth, 2008).This is a way of establishing the research hypothesis as an accepted

scientific truth; if a research work cannot be replicated then it does not fulfil all the

requirements of testability

Validity establishes whether the results attained through the research project have been

obtained through the correct procedures.

3.3 Delimitation

This research will be conducted in a mixed form, combining the use of a qualitative and

quantitative methodological approach.

Questionnaires will be set and sent out to individuals and business entities this will serve

to find out their opinions, attitudes and behaviour regarding their use of Information

systems in the day to day running of their businesses, a form of primary data collection

that makes usage of data that has not been published.

Simple random sampling will be used to get a group to represent a companys ideas and

opinions. Using those techniques we will then be able to find out how valuable is IT for

those people and the effective running of their business.

Online surveys and opinion polls will be prepared and sent out to individuals, with the

purpose of attaining the same results as the previous mentioned techniques.
http://www.experiment-resources.com/philosophy-of-science.htmlhttp://www.experiment-resources.com/philosophy-of-science.htmlhttp://www.experiment-resources.com/philosophy-of-science.htmlhttp://www.experiment-resources.com/philosophy-of-science.html


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3.4 Conclusion

This chapter focused on the methods to collect data and information for this research.

These methods will help with findings of Business value of Information Technology in

this research which will be provided later in the project.


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CHAPTER4

RESULTS AND FIDINGS

4. IntroductionThis chapter documents the findings gathered from the value of Information Technology

to business activities. Surveys and online polls were emailed as well as posted on popular

social network works such as Facebook and Twitter, in order to gather the views of

participants with regards to the given research problem.

4.2.Demographic Study

This is the population sample that participated in the survey in terms of gender.

Gender Number of participants percentage

Male 21 68 %

Female 10 32 %

Total: 31 people

4.2.Questionnaire

Two questionnaires were sent out to individuals, one questionnaire was made up of

closed-ended questions whereby a participant was required to choose their answers to the

question from a set of given answers.


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4.2.1. ClosedEnded Questionnaire

This questionnaire was sent to people that use Information Technology in their daily

activities at work. These included IT personnel as well as non- IT personnel such as

secretaries, receptionist that work with Information systems to carry out their daily duties.

The following were the questions asked:

Question 1

Does the organization where you work conduct their business activities with the aid of

Information Technology?

31 participants took part in the survey and as

shown on the chart below. 87% said yes the

organisations they work for conduct their

business with the aid of Information Technology

while 10% said sometimes the organizations do

and 3 % said the organizations they work for donot use Information Technology. The results

gathered indicated that many businesses are

computerised and see computer as a tool helpful

in the conducting of their activities.

Question 2

Do Information Systems provide any benefit to your activities?

Technology tools only useful if they provide

benefits to its users and the organisation. This

applies to Information Technology; its value is

measured by both the tangible and the

intangible benefits it provides.


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From the responses gathered, it is clear that people see Information Technology as a tool that

provides benefits to the activities they carry out as 94% of the participants said yes.

Information Systems provide benefit to the organization activities while only a small

percentage, 6% said Information Systems do not provide any benefits to their activities.

Questions 3

Is there an importance to using Information Technology in an organization?

68% of the participants responded that

Information Technology is very important in the

organization while 29% responded that

Information technology is just important and the

remaining 3% responded saying information

technology is not important.

Question 4

How important is information technology in the globalized market?

77% of the participants responded Information

Technology is very important in the globalized

market while 19% say Information Technology is

just important and 3% saying it is not important.


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Question 5

Do you believe it is important for companies to train their employees and provide them

with Information Technology knowledge?

68% of the participants believe that its very

important for companies to train employees

and provide information technology

knowledge while 29% believe that it is

important and 3% believe it is not so

important.

Question 6

Has your organizations security been breached through Information Technology

security flaw or fraud?

One disadvantage of Information Technology

could be that it puts an organization and its

assets in dangerous positions that they could

not be exposed to if they did not utilize

Information Systems.

The purpose of this question is to find out the

wide spreads of these security breaches, with

the purpose of finding out if Information

Technology is indeed putting organizations

operations in danger.

In responding to this question, 61% of the participants answered yes, their organization

security has been breached through Information Technology fraud while 39% of the

participants organization security have not been breached.


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Although in the previous questions participants indicated that Information Technology is

useful, it should be implemented with caution and security measures in the organization so

that it does provide security loopholes to the organisation IT systems.

Question 7

What was the impact of this breach to your Organization?

61% of the participants said there have not been

breach impacts in their organizations while 32% of

participants organizations have badly been impacted

by the breach caused by Information Technology

security fraud and 2% faced severe impact of breach

due information technology security flaw.

Question 8

Does Information Technology provide your Organization with competitive advantage?

The aim of this question was to find out if

Information Technology can provide an

organization with competitive edge over those

that do not use Information Technology. 90% of

the participants strongly agree that Information

Technology provide competitive advantage but

6% do not believe that it can while 3% do not

find the question applicable.


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Question 9

Is there a need for Information Technology in business activities?

94% participants believe that Information

Technology is needed in business while 6%

disagree.

Question 11

Can Information Technology effectively replace human labour and in turn do a better

job?

19% answered yes that Information Technology

can effectively replace human labour, 23%

answered no while 23% responded that only

sometimes that it is possible and 35% believe

that though there is Information Technology,

human labour will always be needed.

4.3.OpenEnded Questions

This questioner was distributed to specifically IT personnel and these included all employees

in the IT field from managers to interns and graduates.


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1. What is the value of information technology in your company?

Response: Participants responded with consensus that Information Technology holds a

lot of value to their companies and is a necessary part of a companys business as it helps

them to be more productive and to conduct activities that could not otherwise be done

without Information and technology, but some do point that many of the IT benefits are

not tangible, value that cannot be quantified.

2. Does information technology create advantage for a businessorganization? And if so, how does it do it?

Response: Participants have indicated that IT offers some competitive advantage to an

organization, but it is not always advantageous unless it is a new technological

advancement. IT can only provide advantage if an IT tool is innovative and is not being

used by any other of the competitors or it is used a way that it is optimized that is not

done in the industry and it creates value to the organization.

3. How does information technology improve workers productivity?

Response: Respondents believe that in many cases Information Technology can speed

the delivery of services. This increases productivity in a short space of time. It also helps

in simplifying processes etc. But it is dependent on how workers utilize these tools, IT

alone cannot improve productivity.

4. How do information technology systems help an organizationimprove customer service and reduce costs?

Response: Participants responded that there a lot of Information Technology systems that

have been put in place to provide convenient services to customers and in return these

systems have helped organizations cut down on human labour hence cutting down costs.

Systems such as Enterprise Resource Planning (ERP) provide competitive advantage to

organizations with services like online banking, online purchasing of good and services.


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This has reduced travelling costs, queuing time on the customer side and no need of

hiring a middle man.

5. To what extent has Information technology taken over the activities that wereprimarily done by human labour?

Response: Participants indicated that Information technology has taken over the labour

market. Most activities that were initially done by human labour are now done by IT

systems.

4.3.Conclusion

This chapter presented the data that was collected from the participants in form of online

polls and questionnaire. The information then presented on charts to provide a conceptual

over of the research. The data gathered is also presented in questionnaire to provide a

detailed analysis and views about the Value of IT in Business Activities. Further detailed

analysis will be provided in the next chapter.


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CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter concludes the research that has been conducted on The Value of Information

Technology to Business Activities. The chapter also presents remarks and

recommendations.

From the data collected from participants who took part in the research, the data was then

analysed and the results were documented in the previous chapter.

5.2 Conclusion

Businesses have to a large extend adapted the use of Information Technology into their

everyday business activities. People have embraced the Information Technology

revolution through acquiring Information Technology qualifications and even the semi-

skilled people such as receptionists have acquired at least some computer literacy

certificates to help them do their daily work such as data capturing, appointment,

bookings and many more.

Information Technology has taken over the activities that were previously done by human

labour and businesses have embraced this change. This change has not only benefited the

companies but also customers as well.

5.2.1 Reliability

Unlike human labour, Information technology provides reliable and consistent results.

Garbage in garbage outa common adage in the computer world. So if a user puts in

correct data they will definitely get out correct results and the opposite is true.

IT systems can operate throughout the whole year without any down times. This is not the

case with human beings as they require breaks during the course of their duties.


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Therefore, IT allows organisations to provide services throughout the operation of the

business.

5.2.2 Competitive Edge

This is done through the introduction of new ways to outperform their rivals. These

could be online services that are not offered by rival companies and or products that are

not produced by rival companies or more advanced products and services.

5.2.3 New Businesses Opportunities

E-commerce and E-business has become a business venture for a lot of people. Thanks to

Information Technology there is use of services like internet that has removed boarder

boundaries. Products and services can be bought from anywhere around the world

without need to travel and meet people face-to-face.

5.3 Recommendation

Although a specific model was not used in order to conduct this research, the

observations are based on subjective decisions provided by subgroup of participants in

question. Therefore, the results and conclusions reached through this research may

provide partial reality of the research in question - The Value of IT to Business Activities.

The rise of Information Technology use in business environment indicates that such

businesses are more competitive and have greater market share compared to others. It istherefore recommended that companies should invest more in IT systems as part of

revenue generating strategy that will in turn add value to the business.

Based on the number of participants that took part in this survey, it is suggested there is a

need to conduct further research on a large population. This will allow the author to

develop a greater understanding on The Value of IT on Business Activities.


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ANNEXS

ANNEX A: QUESTIONNAIR

9$JXOKDV,

%HGIRUG*DUGHQV

TO WHOM IT MAY CONCERN

Dear Sir/Madam,

I, Kyasimre Fiona, BTech Degree Student at Vaal University of Technology, would like to

humbly invite you to participate in my research project titled: The Value of Information

Technology in Business Activities.

You are requested to participate in this project by filling the attached questionnaire. This

study will need you to be free and open in answering questions. Your anonymity and

confidentiality will be highly ensured.

Your participation in this research will be highly appreciated.

Yours sincere,

________________________

+aPLOWRQ6HWHQGH


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questionnaire

Procedure

Please answer as many questions as you can. This will allow the researcher to obtain

accurate results.

Confidentiality

You are voluntarily requested to participate in this research and the information provided will

remain confidential and only be used for the research purpose only.

DIRECTIONSPlease put a cross (x) in the box that best answers the question.

SECTION A: BACKGROUND INFORMATION

1. Please indicate your gender.

Male Female

2. Please, indicate your age

Below 18 18 31

31-40 41 and Above

3. Please, indicate your level of education.

Some Formal Education Educated

Other, please specify: .........................................................


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Section B: Questionnaire (Closedended questions)

Question 1

Does the Organization where you Work conduct their business with the aid of information

technology?

Yes

No

Sometimes

Question 2

Do these information systems provide any benefit to your activities?

Yes

No

Sometimes

Question 3

Is there an importance to using information and technology in an organization?

Very important

Important

Not so important

Question 4

How important is information technology in the globalized market?

Very important

Important

Not so important

Question 5

Do you believe it is important for companies to train their employees and provide them withinformation technology knowledge?


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Very important

Important

Not so important

Question 6

Has your Organization security been breached through information and technology security

flaw or Fraud?

Yes

No

Question 7

What was the impact of this breach to your Organization?

Severe

Bad

None

Question 8

Does Information Technology provide your Organization with competitive advantage?

Yes

No

Not Applicable

Question 9

Is there a need for information and technology in Business?

Yes

No

Question 10

Does information and technology improve effectiveness and efficiency?


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Yes

No

Not Applicable

Question 11

Can information and technology effectively replace human labour and in turn do a better job?

Yes

No

Only in a few activities

There will always be a need for a Human touch

Not Applicable

SECTION C: GENERAL QUESTIONS (open ended questions)

1. What is the value of information technology in your company?----------------------------------------------------------------------------

2. Does information technology create advantage for a businessorganization? And if so, how does it do it?

---------------------------------------------------------------------------

3. How does information technology improve workers productivity?-----------------------------------------------------------------------------

4. .How do information technology systems help an organizationimprove customer service and reduce costs?

--------------------------------------------------------------------------------------

5. To what extent has Information technology taken over the activities that wereprimarily done by human labour?

---------------------------------------------------------------------------------------


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