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The Role of Information Technology in Business

Information Technology is an enabler of business functions. The benefits of a well implemented IT system can include efficiency, capacity, speed, scalability or accuracy. But businesses often grapple to find a balance between the requirement to innovate and find efficiencies that benefit the business versus changes that affect the technical system itself. Below is a cheat sheet that provides some guidance on business benefits;

Expenditure Justification Challenge Example Measures
Sales In what way does the expenditure improve sales? Predictable Outcomes
Repeatable Activities
Tangible Results
Relevancy for Others
Safety What safety outcomes does this provide/improve? Training
Lost Time Injury Frequency Rate (LTIFR)
Medically Treated Injury Frequency Rate
Total Recordable Injury Frequency Rate
Easier safety observation records
Easier near miss records
Security What safety outcomes does this provide/improve? Compliance
Collaboration How will business collaboration improve to find efficiencies or improved quality? Shared goals
Feedback Loops
Elevated skills
Facilitated communications
Performance What aspects of performance improvement translate to the business? More granular measures
Capacity What aspects of capacity improvement translate to the business? Store more data
Store longer
Integrate systems
Consolidate systems
Quality What aspects of the quality improvement translate to the business? Data integrity/fewer mistakes

Table 1. IT drivers and business outcome measures

IT as an Enabler - A Competitive Advantage

Business can realize a competitive advantage from IT systems through many avenues. Whether it is increased sales, better customer service, improved customer relationships, faster service, more efficient service, diversity, reduced costs or higher quality products there is little debate that IT systems can be used to improve traditional business functions in order to provide a competitive advantage.

The key challenge in defining IT as an enabler is mapping the enabling function to a measurable business outcome."

IT as a Facilitator to New Markets

It is not just the wide reaching international tentacles of the Internet that can open new markets to business. Different demographics can also be reached through the use of trendy and popular media. In this instance, IT plays the role of facilitator because it acts as a go-between between the business itself and the new market.

New online markets can be reached by geography, demographics, product line or service line. The success in entering those markets, however, is closely related to non-technology related factors such as commercial strategy, brand, demand and competition.

IT to Provide Agility

The economy, events, trends and circumstance play a part in business survival and prosperity. Agility is a measure of the business' ability to adapt and even embrace change. Technology plays a decisive role in modern business transformation efforts. Examples of technology that enables agile responses: Cloud services, remote access, as-a-service products and mobility products.

IT to Enhance Decision Making

The massive volumes of information available today both on the Internet and through corporate networks can be used as reference material to solidify or justify decisions. The benefits of ample and accurate information have been known and well understood for hundreds of years. In fact, it was the need to accelerate technological progress that gave rise to the Internet today. The commercial value of information has been proven over and over by companies such as Google and Facebook and is reflected in the patent legal system.

Information Technology supporting IT Systems

No doubt that occasionally the IT systems themselves will need upgrading, maintenance or replacement. Sometimes the benefit to the business may be something that is not tangible such as reduced risk to other systems. Backup systems are a good example of this kind of benefit.

Technology supporting technology is one of the most difficult areas to quantify in terms of value because areas such as security, business continuity and disaster recovery only come to the forefront in extreme situations.

IT to Engage Customers

Social media has been adopted by most world known brands in order to engage customers, to gain feedback and/or to build a sense of community.

Technology to aid customer engagement exists through CRM (Client relationship management) systems, social media and website feedback to name a few. User experience is one common measure of the digital engagement quality.

IT to Reduce Risk

The reduction of risk from the adoption of IT systems is almost a paradox. Yes, many risks that existed using the traditional paper systems can be mitigated however a brand new set of risks have been introduced. Some elite IT systems, however, have been developed as fail safe systems. These are deployed as mission critical systems and have the primary task of reducing the risk of failure to an infinitely small percentage.

More affordable, commercially available systems are also available as risk mitigation, they are not as effective as mission critical systems but can be very effective nevertheless. These are often seen in the form of stacks, clusters or farms.

Further Reading

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