Over the last three decades, the role of IT in business has drastically changed. Initially, IT was meant to assists in the day to day operation of the company such as keeping records and controlling inflow and outflow. However, the need has changed. Today, most business entities focus their energy on making IT an entity that not only serves customer-related services but also influences decision making processes within the company (Baltzan, 2012). The level of investment that has been directed on IT infrastructure in the last three decades calls for increased value-addition mechanisms from the IT sector.
There has been a rapid increase on investment in IT in the form of hardware, software, applications as well as platforms. The rise of the internet and web technologies over the years has increasingly changed the role of IT. This coupled with innovation within business and technology, has necessitated a paradigm shift geared towards ensuring that IT plays a role that not only improves service, but also maximizes the return on investments (Piazolo et al., 2013). This has been common knowledge to all business entities. However, business entities have not maximized on the role of IT as a tool that can influence decision making processes. This paper seeks to focus on this business gap and to unearth the potential benefits that IT can have when utilized in business decision-making process.
Innovation is a critical element of business today. For business entities to remain relevant in a highly competitive market there is a need to ensure production based on new trends, customer preferences and competitor products. All this requires a vast amount of information related to business trends, customer preferences and changing lifestyles (Baltzan, 2012). This is where the role of IT can be brought in to facilitate the collection of relevant information that can be utilized so as to make the most viable decisions in regard to innovation. Innovation, far from creativity involves channeling of resources into a new product or service, the risks and benefits are forecasted, and this implies a high level of risk. However, when enough knowledge on market aspects is available, the risks can be highly reduced. It offers more than could be offered through traditional frameworks for decision making. It, however, finds its basis in these models such as the Porter’s Five Model. In the context that a company needs market information about a certain product or service, IT can effectively provide information based on supplier trends, buyer preferences, threats and opportunities.
With tries information, today there is a vast number of applications that can be used to analyses both statistical and qualitative data. These can be effectively employed to offer tangible information regarding innovations. Thus, IT would provide a shift from the past where managers would rely on assumptions and luck in making business decisions. IT has impacted on business in two ways.
For one, information availability on time has been improved greatly and secondly, it has provided easier means through which data analysis can be used. Raw data while available may not be useful in decision making. However, with computer applications capable of analyzing large volumes of complex data, business entities are in a position to reduce the risks associated with investment on innovations. Such risks include overproduction and underproduction which would all impact negatively on business (Mancini et al., 2013). It also includes poor allocation of resources on new investment as well as poor time response in relation to market trends.
Computer applications, as well as web technologies such as dashboards, offer managers and decision makers a reliable platform on which real time data relating to supplies, customer information and market domination can be found. Thus, at a time when dynamism defines the business environment, there is a need to define the role of IT in innovation. All infrastructures meant for IT should be gauged not just on the trends in technology but on the ability to influence or add value to decision making process (Piazolo et al., 2013). It should be a shift from the past where decision the business innovation meant applying new IT technologies.
Baltzan (2012) argues that to facilitate business decision making, there is a need to align the business strategic plan and objectives the IT systems. This would provide a perfect framework that can allow changes or formulate limits for change. This is governed by the capabilities of the systems in relation to the company’s strategic plan. This means that the policies, rules, processes and strategies within an organization are deeply entrenched in the IT systems of the company.
Thus making a decision for instance on innovations within the next five years, the It systems can offer the decision makers valid data on the prospects of such innovation. This is initially gauged from the IT systems level where the changes in hardware, databases or telecommunications facilities due to innovation are used. In the case where, the IT infrastructure would require an overhaul to accommodate innovation, the viability of that idea undoubtedly be rendered low. On the other hand, it would mean that such innovation would limit the performance of currently existing systems. Such ideas would be a good foundation for making decisions.
According to (Mancini et al., 2013), the major strength of IT systems is the ability to hold information about a business entity, its external environment as well as allowing input and output in between processing activities. This activity is simply descriptive but highly complex in nature. The conversion of input to output involves a feedback process that form the guide upon which reliable data about the company can base its strategic plan and future investment plans. This feedback is a representation of the systems response to activities taking place within a business.
In the case of negative feedback, then managers are ware that some measures need to be implemented to avert the possibility for total failure. On the other hand, positive feedback indicates capabilities of the systems. Such feedback can be used to gauge the optimal ability of a business. Once this is determined, a simulation can be performed to establish the most plausible future projects. These results of a simulation can then be used compared against the business strategic plan. If the two seem to agree, then the decisions on future innovation strategies are maintained. However, if they do not agree, the decision makers will have to draw new plans basing their arguments on the simulation model results (Mancini et al., 2013). This will involve changing a part of the strategic plan or the whole plan in its entirety in if it does not reflect the results of the IT systems.
Despite the massive benefits that can be accrued from IT systems there are serious problems underlying their implementation, as well as usage. Among the major threats is the security threat that adoption of these technologies poses to business entities. The sharing of information and cloud computing technology for instance means that the sensitive business data is exposed to the risk of hackers. The solution, however, lies in the systems.
For business entities that may consider IT systems as a vital component of decision making process, it is important to safeguard the information at all costs. At the middle level of IT system are the workers and scientists who should be trained to ‘think like the hacker’ (Baltzan, 2012). Such training ensures that the workers can test the systems to the limit to ensure its stability. A slight inconsistency in the system would lead to poor decision making, and this could hurt the business prospects on the long term. As such, the planning, control and coordination capabilities of the systems would be compromised. An all inclusive approach from the top level management and the workers would be useful in determining the stability and reliability of the systems.
Technology has changed the approaches to many aspects of business. It is the high time that business abandoned the notion that IT acquisition depends on the capability of the business. Today, it is the IT systems that determine the capabilities of the business especially in innovation. There are different levels of innovation that can be implemented in business. There could be innovation designed to upgrade current services or an overhaul of the entire production line and to replace with innovation line (Piazolo et al., 2013).
The viability and implementation decision should be based on the underlying IT infrastructure. The focus should be based on IT as a service rather than as a sub-component of the organization. Giving IT systems priority in coordination and control of processes as well as decision making means that the company or business relies on a logic model that can be simulated to provide empirical evidence of success or failure. Upon these deductions, the possibility is that the correct and most plausible idea will be taken, and a large risk is avoided (Baltzan, 2012).
Baltzan, P. (2012). Business driven information systems (3rd ed.). New York: McGraw-Hill Irwin.
Mancini, D., Vaassen, E. H., & Dameri, R. P. (2013). Accounting information systems for decision making. Berlin: Springer.
Piazolo, F., Felderer, M., & ERP Future 2012 Research Conference (2013). Innovation and future of enterprise information systems: ERP Future 2012 Conference, Salzburg, Austria, November 2012, Revised papers. Berlin: Springer.