The role of information technology

Although Information Technology (IT) has become the key factor to increase competitiveness in the business world but many owners and managers are still confused about the role of IT. A Wall-Street analyst wrote: “Even today some company owners and Chief executive officers (CEO) do not know how to apply technology to capture markets, grow revenue, minimize risk, and reduce costs. IT is no longer about desktop applications or network that connects several applications to the Internet but a strategy to drive revenue growth, increase effectiveness and efficiency. To understand what you can do with technology is a fundamental part of what every business leader needs to know.”

Traditionally, company owners and managers consider IT as a supporting function which means it incurs cost. The cost of buying hardware or software, the cost of integration, the cost of hiring IT workers, and the cost of upgrades and maintenance IT systems over time. Many IT workers accepted supportive roles because they do not understand how business works, how company operates or generates revenue. That is why many company owners and managers are confused and ask: “What exactly is technology required to do for the business?”

Today IT workers are no longer just do technical works such as programming, testing etc. but they must also understand business. They must know what technology can do or cannot do to set the expectations of a company owner or managers. That is why currently more companies are hiring graduates in Information System Management (ISM) and it has becoming a “hot degree” and in most top schools, Computer Science and Software Engineering students are required to take at least one business course.

By implementing Information Technology (IT) company can increase its productivity or the overall capacity to produce more. For example, Automated Teller Machines (ATMs) have significantly helped banks to do more as it opens 24 hours a day and 7 days a week. The advent of ATM technology and Internet banking have changed the way traditional banks operate and allows banks to do more businesses and reach customers who cannot travel to the banks. By automate office works, IT can also reduce time wastes by eliminate unnecessary bureaucracies. Online business has significantly reduced the time to market for many products. Within minutes, products can be sold on line, reducing the cost of physical stores and sale persons. The current competitive global market has forced companies all over the world to rethink their strategies. Company owners are paying more attention to what investments to make and how to keep cost lower. By having a strong IT, company can reduce the cost of operating the business. For example, by using cloud computing or Software as a Service (SaaS), company can eliminate the cost of hardware, software licenses, power, and administrative etc…

Since many company owners do not have the technical knowledge on how to use technology across the company, the role of the Chief Information Officer (CIO) has become more critical. CIO must assess the company to evaluate where he can implement IT to improve efficiency and helps company to focus on strategic activities. CIO must be able to align IT with the business units within the company to increase effectiveness and efficiency.

Today every manager must have knowledge of IT as it is a requirement for all managerial positions. With current economic recession, every company is asked to reduce costs and improve efficiency by reorganize everything according to a defined process then automating these processes using IT. Now more than ever that everyone in business must view IT as a strategic enabler for the business to distinguish itself from its competitors. Industry study showed that successful companies have achieved significant improvement by optimizing IT infrastructure and invest more in IT. Companies investing in IT during this economy crisis are companies that will survive and excel as the economy improves.


  • Blogs of Prof. John Vu, Carnegie Mellon University