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Information technology (IT) refers to the management and use of information using
computer-based tools. It includes acquiring, processing, storing, and distributing
information. Most commonly it is a term used to refer to business applications of
computer technology, rather than scientific applications. The term is used broadly in
business to refer to anything that ties into the use of computers.

Mostly businesses today create data that can be stored and processed on computers.
In some cases the data must be input to computers using devices such as keyboards
and scanners. In other cases the data might be created electronically and automatically
stored in computers.

Small businesses generally need to purchase software packages, and may need to
contract with IT businesses that provide services such as hosting, marketing web sites
and maintaining networks. However, larger companies can consider having their own IT
staffs to develop software, and otherwise handle IT needs in-house. For instance,
businesses working with the federal government are likely to need to comply with
requirements relating to making information accessible.

The constant upgrade in information technology, along with increasing global


competition, is adding difficulty and hesitation of several orders of scale to the business
and trade. One of the most widely discussed areas in recent business literature is that
of new organizational network structures that hold survival and growth in an
environment of growing complexity.

Effective implementation of information technology would decrease liability by reducing


the cost of expected failures and increase flexibility by reducing the cost of adjustment.
The businesses reaction to the environment remains to be the vital determinant for its
effectiveness. The capabilities and flexibilities of computer-communication systems
make them gradually more appropriate to businesses by being able to respond to any
specific information or communication requirement.
Information Technology is having impact on all trade industries and businesses, in
service as well as in manufacturing. It is affecting workers at all levels of organizations,
from the executives to middle management and clerks. Information technology is
increasingly becoming a basic factor of all types of technologies such as craft,
engineering, routine, and non-routine.

The advances in Information Technology would result in remarkable decline in the costs
of synchronization that would lead to new, concentrated business structures. It enables
the business to respond to the new and urgent competitive forces by providing effective
management of interdependence.

In the near future businesses would be facing a lack and a redundancy of information
called information glut. To solve the information-glut companies will need to introduce
methods for selective thinning out of information. Improvements in telecommunications
will make it easier to control business units dispersed over different parts of the world.
Advances in telecommunications, would result in increased distance-communication.
Indirect communication would be preferred for well-structured information for routine,
preprogrammed and decision processes.

  „   


  

IT (Information technology) provides commercial and industrial systems for businesses.


These systems enable businesses to function effectively and efficiently.

The use of information technology systems in a business environment can be classified


into , namely, function, communication, management and
enterprise.

  !

These applications allow individuals to function effectively in the workplace. Examples


of these systems are word processors, spreadsheets, statistical analysis software and
computer aided design (CAD). Employees can work and perform their task individually
or collectively using these software technologies.
"#  !

Network IT allow effective communication within and outside an organisation. Examples


range from simple e-mail (electronic mail) to blogs, wiki, IM (instant messaging) and
electronic conferencing. These technologies promote interaction and collaboration
among working groups and also facilitate quick information flow at all levels.

!  !

 c is a planned application that is designed to process data and transform it into
useful information for management decision making.

In general, MIS are subsets of Enterprise IT systems. However, because of the vital role
MIS play in a business environment, it is considered here as a major information
technology for businesses.

Management operates at different levels and so it is possible to apply management


information systems at these varied levels.

Basic examples of management information systems are human resources


management systems, financial management information systems and marketing
management information systems.

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Enterprise IT systems are technologies designed to integrate and manage entire


business processes for large organisations. Typically, enterprise application software is
hosted on large servers over a computer network. Transmission of information can
either be internal or external.

Examples of enterprise information systems may be accounting software, health care


specific software or electronic data Interchange (EDI). Another example of software
within this category is CRM (Customer relationship management software).
Information technology plays various roles in business, and provides a huge range of
capabilities that enhance management performance. It is therefore important to
understand the four major categories of IT systems and their functions in a business
environment.

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In the business context, ˜ ˜  


  is all about the application of 
operations to business processes. In recent times, IT has replaced the traditional modes
of businesses with innovative technologies. This has boosted the performance of
businesses enormously and saw the emergency of new business innovations in many
areas.

&'%'(% 

The use of Information technology applications enable businesses to carry out their
functions more effectively in the place of work. Such IT applications include
spreadsheets, ¢ , word processors, statistical analysis software and
computer aided designing (CAD) tools. Employees can carry out their task
independently, effectively, faster and more accurately with the use of these
technologies.

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Available IT systems can handle entire business processes for big enterprises. Such
technologies connect and centralize all business activities using large computer servers.
Some major advantages of these technologies are proper planning, efficiency, easy
forecasting and control and of course increased profit.

&!!

With the range of    ˜ ˜   () available today, businesses can
improve their business management strategies, make informed decisions that can
skyrocket their profits and productivities with less efforts and reasonable timeline.
Information technology management tools can be applied to different areas of
management including human resources, information, marketing and finance.

"#
!!

The use of IT networks enables effective communication within or outside a business


environment. For instance, the use of e-mails, instant messaging (IM) and electronic
conferencing has enhanced uninterrupted communication for businesses with multiple
offices. ˜  technologies aid collaboration and interaction between businesses
and clients and also make quick information flow between the two parties achievable.

'
!! ''

A major advantage of Information technology to business is    ± electronic


buying and selling. E-commerce gave room for businesses to expand locally, nationally
and globally by removing time, distance and language barriers. Organisations can now
do businesses across the world, hold meetings with prospective clients and partners via
the   . Small businesses can reach wider audience, grow into global empires and
utilize competitive advantage.

" &' %

The use of IT has brought about  


  innovations and therefore new
businesses; these include creation of virtual shops, markets and virtual homes. Also;
think of all the innovative i-products such as iPods, iPhones, iTunes and iPads.


) „ **( „ 
  „   
  

The availability and use of information systems and technologies has grown almost to
the point of being commodity like in nature, becoming nearly as ubiquitous as labor. By
1991, U.S. companies spent more on information technology than any other form of
investment; total spending on computers and related services doubled from
approximately $80 billion in 1984 to over $160 billion in 1998 (Taylor, 1998). Information
systems include many different varieties of software platforms and databases. These
encompass enterprise-wide systems designed to manage all major functions of the
organization provided by companies such as SAP, PeopleSoft, JD Edwards, and so on,
to more general purpose database products targeted towards specific uses such as the
products offered by Oracle, Microsoft, and many others (e.g., Evans, 1999; Hickman,
1999; Kathleen, 1999; McKendrick, 1999; Menezes, 1999). Information technologies
encompass a broad array of communication media and devices which link information
systems and people including voice mail, e-mail, voice conferencing, video
conferencing, the internet, groupware and corporate intranets, car phones, fax
machines, personal digital assistants, and so on (e.g., Andolsen, 1999; Campbell, 1999;
Edwards, 1999; Grahm, 1999; Schober, 1999; Spiegelman, 1999; Tarabour, 1999;
Wildstrom, 1999). Information systems and information technologies are often
inextricably linked and hereafter will refer to them jointly as information technology (IT).

Recent scholarly and popular literature has examined the role that IT plays in promoting
collaboration and information sharing both inside and across organizational boundaries
(e.g., Barua, Sophie Lee & Whinston, 1995; Lind & Zmud, 1995; Pickering & King, 1995;
Quinn, Anderson & Finkelstein, 1996a). In this detail we draw on recent IT management
literature to systematically review and assess the role of IT in the organization. Our
study builds on Huber's (1990) suggestion that IT is a variable that can be used to
enhance the quality and timeliness of organizational intelligence and decision making,
thus promoting organizational performance. However, Huber' s analysis was offered at
a time when IT was making its first major inroads into organizational life and the current
study extends and updates Huber's research in three main ways. First, building on
recent research, we focus on the two strategic outcomes of efficiency and innovation
which capture many of the specific benefits that result from the use of IT. Second, we
apply this approach to the examination of organizational functioning by describing the
impact of IT on a broader array of organizational characteristics than was addressed in
Huber' s work. Finally, Huber' s theory treats several organizational characteristics as
dependent variables with IT positioned as the independent variable. In order to offer a
more encompassing view of IT and organizational functioning, we examine IT as a
moderator of the relationship between organizational characteristics and several
organizational outcomes, most importantly, efficiency and innovation. We believe this
approach both places IT in a more theoretically plausible position and offers a useful
framework that allows for the discussion of IT and a larger array of strategic
organizational issues.

The feedback loop connecting organizational outcomes to IT in the figure serves to


recognize a temporal reality in the application of any new technology. Optimally fitting a
given IT to its context and ramping up the learning curve associated with the IT both
require continuous and/or periodic modifications to ensure the IT's maximum utility.

!! 

In the 1960s and 1970s, when many definitions of organizational technology were being
developed. IT was largely nonexistent with computers being almost entirely confined to
the world of mainframes and backroom functional applications. Technology was
conceptualized in terms of technical complexity, operations technology and variability;
interdependence: routine-nonroutine, and manageability of raw materials. Following
Perrow's suggestion, we propose that technology should be viewed broadly as the
process of managing the uncertainty and risk surrounding the transactions necessary to
convert inputs into outputs.

Clearly a list of the specific ways in which IT impacts an organization would be lengthy
so we have chosen not to focus on the numerous specific capabilities IT affords
organizations. Instead, based on a review of the literature, we identify several major
outcomes associated with the application of IT. In addition, an analysis of this research
leads us to argue that, at an even higher conceptual level of analysis, IT moderates the
effects of organizational characteristics on outcomes through its ability to generate
information efficiencies and information synergies.

Information efficiencies (INE) are the cost and time savings that result when IT allows
individual employees to perform their current tasks at a higher level, assume additional
tasks, and expand their roles in the organization due to advances in the ability to gather
and analyze data. For example, as the result of the application of IT in the organization
it is very likely that a reshuffling of tasks will occur as technologies increase peoples' or
subunits' ability to process information. What before, for example, might have been a
task that requires the inputs of three different people or subunits becomes a task that
one individual or function can perform effectively because IT helps to increase both the
amount and quality of information which can be adequately processed. As we have
defined them, INE are largely a within--person or within--group effect. Thus, on the one
hand, IT might simply allow each individual or subunit to perform more work,
cumulatively providing a gain in organizational efficiency.

On the other hand, information synergies (INS) are the performance gains that result
when IT allows two or more individuals or subunits to pool their resources and
cooperate and collaborate across role or subunit boundaries, a between--person or
between-group effect. For example, information synergies occur when IT allows the
different individuals or subunits to adjust their actions or behaviors to the needs of the
other individuals or subunits on an ongoing basis. In essence, information synergies
arise when IT helps to promote the multiplicative and nonseparable gains that can be
obtained from team--based cooperation.

Bearing these two meta--benefits in mind, the five broad categories of organizational
outcomes we have identified from our review of the literature are: improved ability to link
and enable employees, improved ability to codify the organization's knowledge base,
improved boundary spanning capabilities, improved information processing that leads to
increased efficiency; and improved collaboration and coordination that promotes
innovation.

Memory is clearly fallible and subject to erosion and error; the human capacity for
memory as a component of organizational memory is less than perfect. Inside an
organization, memory has also been quite fallible because, as a collective of individuals,
the firm is only able to maintain a minuscule portion of the information that is currently
available to it. Advances in IT have greatly facilitated organizational memory and the
ability to capture and integrate explicit knowledge by making it easy to codify,
communicate, assimilate, store, and retrieve.
! &' +„'& ,

Information technology (IT) has become a vital and integral part of every business plan.
From multi-national corporations who maintain mainframe systems and databases to
small businesses that own a single computer, IT plays a role. The reasons for the
omnipresent use of computer technology in business can best be determined by looking
at how it is being used across the business world.

!!

For many companies, email is the principal means of communication between


employees, suppliers and customers. Email was one of the early drivers of the Internet,
providing a simple and inexpensive means to communicate. Over the years, a number
of other communications tools have also evolved, allowing staff to communicate using
live chat systems, online meeting tools and video-conferencing systems. Voice over
internet protocol (VOIP) telephones and smart-phones offer even more high-tech ways
for employees to communicate.

% !

When it comes to managing inventory, organizations need to maintain enough stock to


meet demand without investing in more than they require. Inventory management
systems track the quantity of each item a company maintains, triggering an order of
additional stock when the quantities fall below a pre-determined amount. These
systems are best used when the inventory management system is connected to the
point-of-sale (POS) system. The POS system ensures that each time an item is sold,
one of that item is removed from the inventory count, creating a closed information loop
between all departments.

*!

The days of large file rooms, rows of filing cabinets and the mailing of documents is
fading fast. Today, most companies store digital versions of documents on servers and
storage devices. These documents become instantly available to everyone in the
company, regardless of their geographical location. Companies are able to store and
maintain a tremendous amount of historical data economically, and employees benefit
from immediate access to the documents they need.

!! !

Storing data is only a benefit if that data can be used effectively. Progressive companies
use that data as part of their strategic planning process as well as the tactical execution
of that strategy. Management Information Systems (MIS) enable companies to track
sales data, expenses and productivity levels. The information can be used to track
profitability over time, maximize return on investment and identify areas of improvement.
Managers can track sales on a daily basis, allowing them to immediately react to lower-
than-expected numbers by boosting employee productivity or reducing the cost of an
item.

!„'&$!

Companies are using IT to improve the way they design and manage customer
relationships. Customer Relationship Management (CRM) systems capture every
interaction a company has with a customer, so that a more enriching experience is
possible. If a customer calls a call center with an issue, the customer support
representative will be able to see what the customer has purchased, view shipping
information, call up the training manual for that item and effectively respond to the issue.
The entire interaction is stored in the CRM system, ready to be recalled if the customer
calls again. The customer has a better, more focused experience and the company
benefits from improved productivity.

'
Although the advantages of Information Technology in business are immense, it is very
important to note some of its major disadvantages; these are security threats brought
about by creation of malicious software programs known collectively as malware. These
threats include identity theft, damage to computer systems and possible destruction and
loss of invaluable data and information. The good news is that technologies continue to
advance and as such produce anti-malware programs to reduce the risks to the barest
minimum.

 * 

I have chosen an automobile company Land Rover ³Sigma Motors´ which is the only
Local assembler of Land Rover defender Vehicles. I visited their head office located in
Islamabad and gathered the information for their information technology evolution.

A brief profile of the company is as follows:

Company Name: Sigma Motors Limited

Registered Office: 2069-W, Jinnah avenue, blue area, Islamabad

Regional Office: 608, Progressive Plaza, Beaumont Road, civil Lines, Karachi

Own 3S facilities: Karachi, Islamabad, and Lahore

Head office: 28, Kaghan Road, F-8/4, Islamabad

Chairman: Mr. Mumtaz Hasan Khan

Chief Executive: Col. Syed Zafar uddin Ahmad (retd.)

Authorized Share Capital: Rs 350,000,000 divided into 35,000,000 shares of Rs. 10/-
each

Total Equity: Rs. 262,000,000/-

Auditors: Anjum Asim Shahid Rahman Chartered Accountants

Workforce: 179 Employees

Membership: Islamabad Chamber of Commerce and Industry

ISO Certification: Awarded Certificate of Registration for ISO 9001:2000 QMS on


June 14, 2007
Nature of Business: To manufacture/assemble/supply Land Rover variants with
warranty, after sales support and spare parts.

Products: Defender (imported & locally assembled)

Eight different variants are being assembled in Karachi

Range Rover, Range Rover Sports, Discovery & Freelander

Sigma Motors was established in 1994 as private limited company, converted to public
limited in October 2007, with the sole authorized distribution rights of Land Rover UK,
one of the world¶s largest manufacturers specializing in the production of 4 x 4 vehicles,
in Pakistan. Initially the scope of activities was limited to the distribution of CBUs from
Land Rover UK.

'!'„%*

In 2001, the company made a mega shift in its operations by starting assembly of Land
Rover variant named ³Defender´, after getting a huge order from Pakistan Army.

For this purpose, technical assistance was taken directly from Land Rover. Assembly
line and workforce of Ghandhara Nissan Limited was used under contract agreement
that made a production capacity of 2,000 units per annum available for Sigma Motors.
Needless to mention, SML has facilitated Land Rover & Pakistan Army for the
acquisition of such CKDs.

Till date Sigma has signed six assembly contracts, for around 7,000 vehicles, with The
Ministry of Defence. Four of which have successfully matured while the fifth and sixth
contracts are under progress.

%'-&'&

Land Rover Defender vehicles were launched for the general public in August 2004.
This was supported by focused advertising for niche market which has off road
traveling. These vehicles are available in three models namely 90 Station Wagon, 90
Soft Top and 110 Station Wagon. We are also supplying the brand to different
departments of the Government of Pakistan and Azad Kashmir under various contracts.
All these vehicles are now being used in various regions of Pakistan.


!$'!„( !!!


Sigma Motors Limited is an example where ERP system was implemented correctly.
Sigma Motors Limited is a 2 billion Rupee Automotive organization. Sigma had a
fragmented IT system across 6 Centers.

Few years back, ordering was not integrated with production systems, nor was forecast
tied to budgeting systems. Because the data was different throughout the organization,
management was not getting the right information they needed to make sound
decisions.

Sigma recognized that the best way to integrate the various data flows would be
through an ERP system. They decided to go with what was the industry standard, SAP.
It was not just considered a technology initiative, but a corporative initiative that could
help Sigma in all facets of an organization. They recognized quickly that the problems of
the Sigma were not so much that the systems were fragmented, but the organization
was. To place a single order, a customer would have to make many different calls and
deal with a variety of different business units. This was frustrating to the customer.
Things were just as confusing with internal operations. It could take up to four days (and
seven different departments) to process a single order. Inventory was written off and
sales were lost.

Management structured the ERP initiative to transform the method in which they
provided Service. They wanted to achieve tighter integration between its business and
system processes.

They focused on materials management, production planning, order management and


financial reporting. These were the areas that they struggled the most with and had the
greatest impact on their ability to manage customer relationships. To further maintain
their focus, they only installed modules that required them to support these four targeted
systems. In addition to the systems changes, they made organization structural
changes as well.

For example the accounts receivable and credit department were merged into one.
They also established a single service department to check orders and resolve
customer issues. The Sigma gained a major edge over their competitors, because the
system automatically updated forecasts and schedules which enabled them to alter
production to meet customer needs. At the time, only one of their competitors had this
ability, which gave them an important edge over the competition. Overall the
implementation was successful because they did not just install an application, but
recognized all the business implications and aligned the business needs with the
technology.

The modules that were used by Sigma Motors Limited, breaks down further into more
specifics:



Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality


Control, Cost Management, Manufacturing Process, Manufacturing Projects,
Manufacturing Flow.

Sigma Motors having consolidated systems with standard methods for automating
tasks, had speed up the steps of the manufacturing process. In turn, this saves time,
increase productivity and ultimately reduce the amount of staff necessary to maintain
these systems.

$$' 
&!

Inventory, Order Entry, Purchasing, Product Configuration, Supply Chain Planning,


Supplier Scheduling
Without an integrated system, the process was very difficult to manage, as information
was scattered among many different systems that can¶t communicate with each other.
With ERP systems Sigma Motors Limited is going through the process of purchase
through production with more ease.

Production department integrated with the sales department and also with the
procurement, keeping in view of thre lead time, reorder levels upto the delivery
schedules.

'

General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed


Assets

Disparate systems lead to inaccurate financial reporting. Single integrated systems


provided Sigma Motors Limited with more accurate information to finance people and
empower them to make better corporate decisions. Corporate governance becomes
easier to manage, as there is now a single system to work with. Auditors can feel more
at ease, knowing there are integrated systems that provide more detailed and accurate
corporate information.

!„

Human Resources, Payroll, Training, Time & Attendance, Benefits

Without an integrated system these departments within an organization were keeping


their own HR records. This was leading to all sorts of chaos. ERP provided Sigma
Motors Limited with a simple method for tracking employees¶ time and communicating
with them about benefits and services.
'+%

Sales and Marketing, Commissions, Service, Customer Contact and Call Center
Support.

By having all customer information in one software system, rather than scattered among
disparate systems that cannot communicate with each other, Sigma Motors Limited was
now able to keep track of orders more easily, while at the same time, coordinate
manufacturing, inventory and shipping among many different locations simultaneously.

'

Now Sigma¶s Management with the help of Information technology strongly controls the
activities of the Company and with the help of timely information/ data/ reports/ analysis/
representations can make accurate and more profitable decisions.