The Impact of ICT in Commerce

Mainframes The earliest computers were what we now call mainframe computers The first commercially available computers appeared in the 1950s (e.g. LEO, shown right) Mainframe computers centralise the processing and use dumb terminals, which are often text only – they do no processing, and are effectively just monitors and keyboards Centralised processing fell from favour in the 1980s as PCs became cheaper and smaller Centralised processing was really an extension of the back office or admin function, and so didn’t change the nature of the organisation greatly.

Personal Computers Everyone now has their own PC – processing is dispersed throughout the organisation This changed working practices, as everyone had access to data processing facilities Managers could now type their own letters and enter information directly into databases – this can lead to a flattening of the management hierarchy as admin is distributed across the organisation, and typing pools (such as the one above) and filing are a thing of the past.

Computers and Storage Offices full of files (like the one on the right) are a thing of the past Storing information on computers has many benefits: There is less need for costly office space It is quicker to store and retrieve information – there’s no need to get the step-ladder out! Sorting and searching makes it much easier to manipulate data… Imagine a client left a message but you couldn’t make out their name, but you had a record of their phone number; how could you find out who it was in a manual filing system?

Centralised Storage Storing data centrally also has big benefits in terms of redundancy - all users are using the same data which can easily be kept up to date The DBMS needs to be careful to maintain the integrity of the data through record-locking What happens if two users try to update a record at the same time? prevent access to records in use? make open records view only? lock open records so that they can’t be changed? lock related records? lock the whole table?

Distributed Databases ICT can sometimes create new technical challenges What if the organisation is large and data is needed all over the country? Maintaining communications links to a centralised database could be expensive and would create dependence Another approach is to distribute the data throughout the organisation so that all users are not connecting at the same time over costly communication lines But how would this be done?

Example The head office has all the data for the whole company Head Appointment Each region stores only customers in that region North East South West Each branch will only store local customers Ipswich Norwich Kings Lynn Each adviser only has his/her own client records John Janet Appointment

Such transfers might only occur once a day Head Office North East South West Ipswich Norwich Kings Lynn I’m off to Kings Lynn! Such transfers might only occur once a day John Fred

ICT in Existing Businesses The power of ICT to store, process and communicate data has led to big changes in existing sectors such as retail and banking: Salaries, pensions and benefits can be paid straight into your bank account 20 years ago you had to queue up in the bank if you wanted some money – now you can use an ATM Internet bank allows people to pay bills and transfer money without leaving the house – we can even have paperless billing from utility companies Digital telephone exchanges make more complex phone systems possible – e.g. selecting services and entering account numbers Lots of high street retailers now accept orders on-line – e.g. HMV, Next and Argos

Telecomms for Competitive Advantage ICT can be used to speed up or simplify business existing processes - e.g. mail order, customer management For example: customers can order goods via a web-site, a confirmation e-mail is sent, and the goods are dispatched from the warehouse - no money needs to be sent, or order forms filled in and posted. sometimes the goods can even be downloaded directly from the web-site, e.g. software, video clips. customers can view their account activity on-line and track orders, and there is less paperwork for the company - they could even have automated “pickers”

Case Study - Guardian Royal Exchange Old “manual” system: an advisor visits the customer, completes forms outlining cover requirements and budget and posts them to the head office actuaries at the head office produce the “illustration” (quotation) and send it to the advisor the advisor returns to customer with the illustration if the customer agrees, the “proposal” form is completed and the paperwork is sent off to the head office There was a 60% rejection rate due to proposals being completed incorrectly, or illustrations being done for ineligible customers, etc.

Case Study - Guardian Royal Exchange New “computerised” method: The advisor visits the customer with his laptop and enters the customers personal details The software suggests suitable products and performs “illustrations” If the customer chooses to buy, the “proposal” is completed on the laptop and printed out for the customer Back at the office, the advisor plugs the laptop into a phone-line and transmits the data to head office. Using this method, the advisor can complete the sale in one visit, and use of cross-field validation, etc., reduced the rejection rate to less than 2%!

Social Implications There can be resistance to using new technology this can lead to systems lying unused in the GRE example, so few advisors wanted to use the laptops that they introduced a higher commission rate for policies transmitted electronically The workforce will need to be trained to use new systems Sometimes companies introduce new ICT systems with the intention of reducing the workforce - in the GRE example they would have been able to get rid of head office actuarial staff

New Businesses As well as transforming old businesses, the introduction of ICT has led to the creation of new products and services. 15 years ago no-one had heard of: Internet Service Providers and Search engines – AOL and Google are now amongst the world’s largest companies Amazon and other .com companies Mobile phone shops Web-design companies