Information and Communication Technology has developed drastically in the recent years. ICT has become more indispensable especially in the business world. With the advanced technology, sophisticated equipment, and wireless or internet communication, business transactions have become more efficient and effective. Organizations have experienced a substantial increase in business opportunities at the global level, where those that have embraced the advanced technologies can compete more favorably in the international market. Similarly, both external and internal environment have been influenced by IT development in the business platforms. For example, the decision-making process, by organizations’ executives, has been facilitated by the use of sophisticated decision-making software. Consequently, IT integration in organizations has reduced the worker’s workload, which means more can be done at a relatively shorter period. Additionally, global business transactions have become easier, leading to the fast growth of E-businesses. This memo elaborates on different technological issues affecting organizations’ environments (both internal and external).
Development of E-Business
Development of computer and related technologies has diminished the distance and location factor affecting the way of operating a business. A study by Postolov et al. (2014) focuses on the small business operations using e-business profoundly discussing “opportunities and threats” rising use of “the Internet and the electronic business” (p. 104). Small enterprises can benefit in penetrating the external environment through the proper application of e-technology. However, small firms need to be cautious of the technology since it “also brings certain drawbacks or threats” (Postolov et al. 2014, p. 104). A study by Zhu et al. (2004) elaborates on how “technology-organization-environment framework” (TOE) affects their e-business operations (p. 18). The findings indicated that the TOE framework and technology readiness are the primary factors that influence the value of electronic commerce (Zhu et al., 2004, p. 18). Similarly, according to Zhu et al. (2004), “value, while financial resources, global scope, and regulatory environment” have a substantial effect on e-business valuation (p. 18). Similarly, efficient use of electronic technology in business, especially by small enterprises and entrepreneurs, leads to smooth operations.
The success of small firms, especially in the global environment, is dependent on how well they apply the modern technology in their operations. Use of e-technologies ensures effective control of trade operations by enforcing sufficient supply of materials, timely distribution of products and services, and proper documentation while reducing service costs (Postolov et al. 2014, p. 105). It also helps small business create strong relationships with international and developed enterprises across the global through effective communication, which helps them grow in the world market. According to Postolov et al. (2014), through electronic business, small enterprises can “access the global markets and global supply chain of materials,” International customers and sophisticated promotion and marketing methods (p. 107). Contrary to the tremendous success from the use of e-technology, firms experience several drawbacks. Determining whether e-technology is valuable towards the organization’s performance and factors affecting the value of e-business are some of the challenges faced by the management (Zhu et al., 2004, p. 19). The management should, therefore, evaluate how useful the technology is and what are the drawbacks of using the technology.
In developing countries, large firms have more advantage over small enterprises. However, small companies are in a better position in developing e-business as compared to large companies in developed countries (Zhu et al., 2004, Pp. 43-44). Similarly, how well organizations perform is highly influenced by Information Technology (IT).
Impact of IT on Organization’s Performance
IT magnitude of importance in an organization is influenced by several factors. According to Melville, Kraemer and Gurbaxani (2004), both “internal and external factors” such as “complementary organizational resources of the firm and its trading partners, as well as the competitive and macro environment” dictate the extent of IT significance in an organization (p. 283). Similarly, Emphasis should not be put internal perspective in the performance rating. Performance is denoted by effectiveness, which is the attainment of the organization’s goals in its external environment through achieving a higher competitive advantage (Melville, Kraemer & Gurbaxani, 2004, p. 287). Additionally, for organizations in the same line of productions, competitive advantage can be gained through implementation of advanced information technologies, making one business stand out compared to its competitors (Melville, Kraemer & Gurbaxani, 2004, p. 287). Since technology is well advanced in the world business environment, the performance of an enterprise in the global market is highly dependent on how well they have integrated ICT in their operations of activities.
Although IT influences performance, in some cases application of technology may not lead to profits. Melville, Kraemer and Gurbaxani (2004) state that, “although in highly competitive markets firms may apply IT more efficiently, profitability may suffer as gains to IT application compete away,” (p. 306).This is why the management should be very careful when embracing technology to ensure it serves the organization positively. Additionally, small organizations can be the most affected by technology if they fail to implement it correctly. They have to compete with large and developed firms for the same markets; therefore, they should be cautious and take strategic steps in making their product and services unique. Consequently, adoption of technologies such as Electronic Data Interchange can be vital.
Utilizing Modern Technologies
Technologies such as Electronic Data Interchange (EDI) have been widely embraced by many businesses worldwide. EDI involve the exchange of documents electronically within departments or between different firms. Advanced technology has made EDI easier since one does not require a mainframe computer to effect it; a personal computer is enough (Kuan & Chau, 2001, p. 508). Use of such technologies has helped simplify the process of predicting business uncertainties in dynamic environments. This can be achieved through access to correct information about the organization’s environment and proper interpretation of that information. According to Galen and Grodzicki (2011), the “new technological innovations may help evaluators meet” challenges such as uncertainties by “automatically tailoring information content and form to groups and individuals” (p. 127). However, adoption of such technologies is dependent on various factors. Kuan and Chau (2001) state that decision for the adoption of EDI is not solely influenced by characteristics of the technology, but it “also depends on other factors related to the internal organization and external environment” (p. 519). Such factors determine the type of technology to be implemented and at what stage of operation. Similarly, it is important for small firms to embraces technologies such as EDI since it guarantees increased competitiveness in the long term (Kuan & Chau, 2001, p. 519). It is important to note that the modern business world is highly competitive and still growing at a significant rate; therefore, implementation of such technologies should not be overlooked.
On the other hand, there are some negative factors associated with IT integration in organizations’ operations. An example is the threat of job opportunities to employees with poor skills.
“Technostress” in Organizations
IT has immense significance to organizations, but still, poses some negative impacts in some instances. According to Wang, Shu and Tu (2008), advancements in the technological part of an organization mean constant refreshing of “technical skills” by employees (p. 3002). Similarly, employees have to bear much pressure from dealing with complex systems, which results to “technostress” that negatively influences their productivity (Wang, Shu & Tu, 2008, p. 3002). Wang, Shu and Tu (2008) carried their study in China and realized that companies, especially the IT firms are faced with significant pressure from competition among enterprises in this industry, since “the IT industry is” growing at a high rate (p. 3003). Consequently, internal environments are most affected by technostress. This is so because employees do not participate “in the decision-making processes of new technology introduction,” therefore, they only accept changes in technology and endures the complications associated with that (Wang, Shu & Tu, 2008, p. 3005).
Similarly, innovation has become the primary strategy for gaining competitive advantage, especially in the international marketplace. From the study, Wang, Shu and Tu (2008) found out that “employees perceive more technostress under more innovation environments because they feel that encouraging innovation will lead to a more competitive internal environment” (Wang, Shu & Tu, 2008, p. 3010). Therefore, it is important for the policy makers or the managers to consider their employees’ skills and help them adopt the new technologies. If an organization is aiming at achieving its goals, it should consider its competitive environment and strategize on ways to achieve a high competitive advantage through advanced IT integration. Additionally, this should be done systematically to ensure that employees are not negatively affected.
Conclusion and Recommendation
With the dynamic technological business environment, a firm cannot apply old operational methods and expect to compete in an international environment. New technologies are paramount to both internal and external organizational settings. Proper integration of such technologies is the “secret” to organizational success. For example, use of e-commerce to carry out business transactions has enabled firms to operate on a 24hr routine. This has improved profitability through simplified sales and purchases transactions. Modern business needs to update their systems to support the new technology for better survival even in the future.