Business Systems By Don Phrompeng

What is an IT Department? The Information Technology (IT) department manages the technology and computer infrastructure that drives an organization’s business system. The IT department is also known as Management Information Systems (MIS or IS) department.

What IT department does? End-User Technical support Desktop Management Network Management Voice and Data Communication Business Application Strategic Technology Planning

IT Doesn’t Matter According to U.S. Department of Commerce’s Bureau of Economic Analysis, the expenditures of American Companies went to IT. 1965 – Less than 5 % 1980 – Rose to 15% 1990 – Reached more than 30% End of Decade – hit nearly 50% Recently – Over $ 2 trillion a year on IT

Twenty Years Ago Computers were lowest class tools For typewriting and as calculators Best for low level employees like secretaries, analysts, and technicians

Today, that has changed completely Chief Executive talk about information technology’s strategic value They talk about how they can use IT to gain a competitive edge They talk about digitization of their business models

IT Job Positions Chief Information Officer or CIO Business Systems Analyst Programmer Software Architecture Network Administrator Etc.

Proprietary vs. Infrastructural Proprietary Technologies can be owned, actually or effectively, by a single company Infrastructural Technologies offer far more value when shared than when used in isolation IT is more categorized in this type

The end of Build-out phase More competition Greater capacity and falling prices The technology broadly accessible and affordable

This is Vanishing Advantage When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.

The Commoditization of IT Commoditization can be considered as positive, in that it makes the good available to a broader audience, or as a negative, implying the cheapening of a class of “goods” in the philosophical sense. IT is a transport mechanism because it carries digital information.

The History of IT in Business Increased interconnectivity and interoperability From mainframe time sharing to minicomputer-based local area networks to broader Ethernet works and on to the Internet

More companies will fulfill their IT requirements simply by purchasing fee-based “Web service” from third parties. Mircrosoft IBM

Statistics from BusinessWeek During the last quarter of twentieth century, the computational power of a microprocessor increased by a factor of 66,000. From 1989 to 2001, the number of host computers connected to the Internet grew from 80,000 to more than 125 million.

Internet World Wide Web Over the last ten years, the number of websites has grown from zero to nearly 40 million. Since the 1980s, more than 280 million miles of fiber-optic cable have been installed.

IT Build-out is closer to its end First, IT’s power is outstripping most of the business needs it fulfills. Second, the price of essential IT functionality has dropped to the point where it is more or less affordable to all. Third, the capacity of the universal distribution network (the Internet) has caught up with demand

Fourth, IT vendors are rushing to position themselves as commodity suppliers or even utilities. Finally, the investment bubble has burst, which historically has been a clear indication that an infrastructural technology is reaching the end of its build-out.

From Offense to Defense What should companies do? The companies should be willing to explore cheaper solutions, including open-source application and bare-bones network PCs. A lot of companies have been sloppy in their use of IT such as with data storage, which has come to account for more than half of companies’ IT expenditures.

Also, the management should consider the key principles to ensure that information management activities are effective. The following key principles should be considered. Recognize (and manage) complexity Prioritize according to business needs Provide strong leadership Mitigate risks Communication extensively

Work cited Carr, Nicholas. IT Doesn’t Matter, Harvard Business Review At Large. May, 2003. 41-49. http://www.unameits.com