Information Technology has completely changed many different aspects of our lives. Thanks to IT, what was difficult, expensive or downright

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2 Information Technology has completely changed many different aspects of our lives. Thanks to IT, what was difficult, expensive or downright impossible some years ago, is now simple. One of the activities that has been profoundly influenced by IT is the way we do business. In this unit we are going to take a brief look at some of the economic impacts of Information Technology on business. 2

3 We will start by defining electronic business (known as E-business). Electronic business is the application of information and communication technologies, especially Internet and computer networks, in support of all the activities of a company or organization. When we speak about e-business, a lot of people will think about e-commerce, as this is the most visible form of e-business. In fact, in some contexts, both terms can be used in a loosely interchangeable way but there are differences. Many company procedures have been revolutionized by the incorporation of technologies which can be termed e-business ; especially in the areas of production, logistics, management and finance. 3

4 IT is digital, which means that it allows perfect replication, millions and millions of times; it is exponential, which implies that it makes things change faster every time; and combinatorial, as it relies on individual building blocks that can be combined in thousands of different systems of growing complexity. This has brought globalization to the world economy and has revolutionized business so much we are witnessing the creation of a new economy. 4

5 Manufacturing processes have been incorporating computers and information technologies for the last 40 years. Output has been increased. Defects, costs and processing times have been reduced. There are now software programs that can automate and streamline many procedures in manufacturing, and IT allows for enhanced data collection and processing. In turn, this enables better testing and quality assessment. All this has led to the production of higher quality goods at lower prices. 5

6 Logistics is another of the areas that has been revolutionized by Information Technologies. The digital flow of information between a company and its providers and clients has allowed the creation of complex supply chains in which companies externalize (or outsource) some of their processes to outside providers and work synchronously with them to reduce costs and production cycle times. The improvements in logistics have made an important contribution to the globalization of the World Economy. The enhanced flow of raw materials and products also enables companies to select from a greater range of suppliers and enter markets around the world. 6

7 Information technology has also greatly improved and expanded the range of tools available to company managers. The information they have about their business has been multiplied and provides them with much better insights. Enterprise Resource Planning systems can manage all aspects of a business in an integrated way, providing accurate information which is continually being updated, while Business Intelligence tools like Expert Systems, Decision Support Systems or Integral Scorecards can help managers to extract insights easily from very complex data. Customer Relationship Management tools can gather information about the clients and extract trends from their interaction with the company. These and other tools give managers nowadays insights into their companies and the markets they are in that were impossible some years ago. 7

8 E-business has automated many functions and replaced humans with robots or selfservice operations. This has caused the elimination of jobs in a lot of sectors. For example, many car parks have eliminated garage attendants and replaced them with automatic barriers, canteen staff have been replaced with self-service vending machines, car manufacturing factories are equipped with high tech robots that have replaced dozens of manual workers. On the other hand, E-business has created new jobs, especially where IT is involved. Hardware manufacturing and assembly, software programming, or IT project management are a few examples. 8

9 As a final example of how IT is changing how we work, we can mention briefly the healthcare industry. Information Technologies have provided new tools and better information systems to healthcare providers, which have improved the quality of patient care. Among other examples we find that robotized operating rooms have made surgery much more precise, patient management systems have improved the flow of information between different treatment units, thus reducing errors, and that telemedicine provides health care to patients whose doctors could be thousands of kilometers away. To sum up, we can say that the acquisition, transmission and processing of digital data allows for faster and more coordinated processes, increased levels of accuracy and better analysis and insight. 9

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