ICT in Business and Commence.

AS and A Level Business Studies

Section 1 Information: Nature, Role and Context

Chapter 1 - Summary – The Role of ICT

Computing – a look backwards.
Computers and employment
The changing nature of employment
Teleworking
Benefits of teleworking
The problems of teleworking
Case study: Socket to ‘em now
Changing locations of work
Case Study: Remote working

Personal qualities for ICT professionals

Collect Summary and Exercises 1 to 4

Chapter 2 – ICT in Business and Commence

New products and Services
No matter what career you decide to take up, you will almost inevitably need to be able to understand and use information technology. Information technologies are used to create and keep track of documents in offices, seek out exploit new ways of marketing, control factory productions, design and create new products and enable service industries to function on a global scale.

Information technologies have changed the way that business is done. The explosion of knowledge and information has resulted in mind-boggling range of products and services that were undreamt of two decades ago. Automated teller machines (ATMs), fax machines, mobile telephones, CD players, video recorders and computer games are some of the new products. New services include a range of telephone services such as caller ID and ring back, shopping and banking via the Internet, e-mail, barcode-scanning at supermarket checkouts and libraries.

Discussion: Describe some other new products and services that have appeared in the last decade.

Changing shape of organisations
without information technology, businesses large or small cannot remain competitive. As a range of goods and services continues to increase, and markets expand world-wide, some trends can be noted:

More and more people are going into business for themselves, or working for small businesses.
Large organisations are becoming ‘flatter’ and less hierarchical. People work together in-groups rather than individually. Information workers need far less supervision than factory workers do because they have knowledge – they know what to do and when and how to do it. They need information, not supervision.
More and more workers are recruited because of their knowledge and skills in problem-solving, communications, their ability to use their initiative and make appropriate use of new technology.

Case study: Britain’s fastest growing companies
Fast Track 100 is a league table that ranks the fastest-growing unquoted companies between 1993 and 1996. It shows these firms are creating jobs and pioneering technology innovation. Half of the firms in the top 100 are technology-related industries.

But the record of the Fast Track 100 companies cannot disguise the fact that Britain needs to develop many more growth firms. When compared with the huge loss of jobs that big businesses in manufacturing and banking suffered during the early 1990s, the employment creation is small: the 12,500 jobs created in the sector could be offset by just one redundancy programme at a big group.

Six different types of company were identified in the top ranking small companies:

Those with a star product such as Eyretel. In 1990, roger Keenan decided to develop and market his own digital voice recorder. His first big order, worth £80,000 came from an emergency-service base in Virginia, USA, and from then on sales quickly began to grow in America, Britain and Asia.
Those that identified customer service as the key to growth, such as Simply Computers and Software Warehouse.
Companies that excel in marketing their goods, such as Vivid Imaginations and Roldec.
Management leaders such ...

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Six different types of company were identified in the top ranking small companies:

Those with a star product such as Eyretel. In 1990, roger Keenan decided to develop and market his own digital voice recorder. His first big order, worth £80,000 came from an emergency-service base in Virginia, USA, and from then on sales quickly began to grow in America, Britain and Asia.
Those that identified customer service as the key to growth, such as Simply Computers and Software Warehouse.
Companies that excel in marketing their goods, such as Vivid Imaginations and Roldec.
Management leaders such as Wolfe, a building contractor.
‘People champions’ such as Lexis Public Relations.
Acquirers, who take over other companies to achieve growth.

The successful entrepreneurs cited the key factor in their success as customer service, ahead of marketing and the product itself.

(Source: The Sunday Times 7 December 1997)

Discussion: In what ways do you think information technology helps these companies to be successful? Consider the three areas of customer service, marketing and manufacture of products.

Figure 2.1: Types of company in the Top 100 small companies (Source: Fast Track 100)

Using ICT to set-up a small business

Information technology can play a crucial part in the success or failure of a new enterprise. For example:

A spreadsheet can be used to draw up a business plan and to calculate expected income and expenses. It can also be used to perform ‘What-if’ calculations to test out the effects of raising the price but lowering sales, using less expensive components, subcontracting the distribution of goods, and so on.
A graphics package can be used to design the company logo, headed stationery and business cards.
A Word processing package can be used to design invoice stationery and send mail-shots.
A desktop-publishing package can be used to design advertising or promotional material.
A database package can be used to set up the company accounts.
A PC with associated peripherals such as a laser printer is needed to run the software.
A fax machine can be used to communicate with potential suppliers, wholesalers, distributors, printer’s etc.
The Internet can be used to sell products to new and existing customers, and as a valuable research tool.
E-mail can be used to correspond with customers or suppliers.
Online banking can enable you to keep tabs on your cash flow.
The telephone and answering machine are essential to every small business.

ICT in banking

The banking industry makes extensive use of ICT in all its operations.

Using telephone banking, a customer can ring in to check a balance or pay a bill, 24 hours a day, 365 days a year. One major bank has 750 phone banking staff taking up to 50,000 calls a day from 600,000 customers. As soon as the call is answered, the operator asks what service the customer requires, and selects one of 40 items on screen. The customer is then asked for their name and postcode, which enables their details to be retrieved in less than 2 seconds from the mainframe computer in Andover, Hants. As well as handling account queries and transactions, operators can access the bank’s central credit-scoring system, empowering them to agree loans and overdrafts on the spot in many cases. If further discussion is needed, the system can arrange for the customer to visit their branch, by automatically booking a slot in the branch’s electronic diary.
Using ATMs, cash can be withdrawn at thousands of cash-point machines all over the country.
Using a debit card, purchases can be made at petrol stations, supermarkets, department stores, etc and the customer’s account balance checked. If sufficient funds are available, the amount of the purchase is automatically debited to the account.
Credit cards can be used to make purchases over the phone or via the Internet.
Millions of cheques are processed each day using MICR (Magnetic Ink Character Recognition).
Salaries and bills can be paid automatically by Direct Debit.
Electronic smartcards such as Mondex store money on a microchip, which can be topped up just like cash. Goods can be paid by inserting the card into a reader and typing in the amount to be deducted. Such a card could eventually replace cash.

Shopping on the Internet

Online shopping is just beginning to attract attention of all kinds of retailers. In the early days of the Net, small specialist traders found it a useful way of reaching a new, wider market, but today the big retailers are beginning to explore the potential of the ‘Virtual store’. A Web site can be used as a ‘shop-front’ and customers can browse 24 hours a day from anywhere in the world. It can be used to build up a database of customers by asking customers to ‘register’ when they first visit the web site, giving their name and address and sometimes other information about products they are most interested in.

Thousands of companies do business on the Internet, including:

Online Waterstone’s where a ‘Bookseeker’ mechanism can be used to search for titles by publisher, keyword and title ()
AutoHunter, the car site, has more than half a million private and trade advertisements, uploaded daily from 700 newspapers. These can be searched by location, make, model, year, price and even colour – to the relief of one young man who crashed his mother’s estate car one Saturday night and was able to find an exact replica by the following Tuesday ();
Dell, the computer manufacturer, sells £3 million worth of computers a day at its sites ().
Supermarkets such as Tesco have online shopping facilities in many areas of the country.

The drawbacks

What are the drawbacks in this scramble to jump on the technology bandwagon in which the microchip is a key component to practically everything we do? This new information revolution is comparable to the industrial revolution, only far more wide-ranging in its effects. Information replaces raw materials as the driving force of successful world economics. In future, individuals and countries will only be as good as the marketable skills and knowledge they have accumulated. You are what you know.

But at the other end of the scale, a new underclass is being created in Britain. A survey published in November 1996 reported that 40% of the population did not regularly use any of the weapons of the information revolution such as computers or mobile phones. 80% did not know how to get connected to the Internet, and of those online, only 9% used it regularly.

Worse still is the social profile: only 9% of the working people (the C2/E/Ds of the socio-economic grading) have ever used the Internet, compared with 25% of the middle and upper classes. This paints a depressing picture of a new two-nation Britain even more polarised in terms of access to the advantages of the information age than the monetary gulf between the rich and the poor that so shamed the eighties. The dream of a new age of equal opportunities for all once again appears to be foundering.

Just as in mediaeval times when many of the great cathedrals were built, the Freemasons represented an elite body of people with specialist skills in stonemasonry, which they jealously guarded; so today with ICT skills are the indispensable builders of the information age.

The dangers

A reliance on technology brings with it unavoidable dangers. Faulty hospital equipment that delivers the wrong dose of radiation, ‘fly-by-wire’ aircraft that develop hardware or software faults and fall out of the sky, software bugs that corrupt data held in massive databases, are just some of the catastrophes that can result from our dependence on technology wonders.

Case study: Charity database corrupted.

George is a computer consultant who recently travelled to London to arrange some consultancy work with a large national charity, with annual donations of £2.5 million, and a donor database of nearly half a million people worldwide. George was asked to investigate methods of speeding up data entry but, when he examined the application, he discovered that the software had been written some 7 years previously and added to by well-meaning volunteers at different times to cope with each new need. They were using Version 1 of the database software, since superseded by version 2.0, 2.1 and 3.1….6. He took the details of what was required, and went home to prepare a quote. One problem was that this version of the software was no longer available and he only had a much more up-to-date version. This meant the work would have to be done on-site, which would mean travelling up to London every day instead of making the changes on his home PC and going up once to install them. Also, knowing that the early software had suffered from many bugs, he asked whether they had ever experienced problems with data corruption. The boss was not sure.

A week later he received a panic call from the charity. They had just sent out a major mailshot, and now discovered that thousands of people on the database had somehow been given identical ‘unique’ reference numbers’. Their backup copies all showed the same problem. It would now be impossible to update the correct donor’s record when a donation was received.

Could this problem have been foreseen or averted? What course of action will George recommend now?

Exercises

‘The development of Information Technology has had significant effects o society, individuals and organisations.’
With the aid of specific examples discuss this statement. Include in your discussion:

The effects of Information Technology on society at large;
The effects of Information Technology on employment and work methods;
The effect of Information Technology on individuals.

Discuss in an essay the concept of a cashless society and the assertion that we will become one. You should refer to steps taken by banks and other financial institutions to move us towards a cashless society and explain why some people feel that it may never be possible to achieve such a goal.

List four different software packages that a small business would find useful, explaining in each case why they would be useful.

Replacing a manual system by a computerised system can have unwelcome consequences. Suggest three different examples of these unwelcome consequences at least one of which should be social and least one economic.

Rai Karra Page 4/20/2007