Select your language

Suggested languages for you:
Log In Start studying!
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free
|
|

All-in-one learning app

  • Flashcards
  • NotesNotes
  • ExplanationsExplanations
  • Study Planner
  • Textbook solutions
Start studying

Information and Communication Technology in Business

Save Save
Print Print
Edit Edit
Sign up to use all features for free. Sign up now
Business Studies

Can you name a business that does not use a computer to keep its logs or a mobile phone to communicate? I can’t. Businesses have to compute their sales, keep a track of employee attendance, and communicate with customers and other stakeholders daily. As an integral part of these processes, information and communication technologies (ICT) are becoming an inseparable part of businesses' day-to-day activities. Let's take a look!

Importance of information and communication technology in business

Because of information technologies, businesses can now process the data they collect. Communication technologies help to coordinate things better.

Imagine what would happen if Google shut down for a day. Or if news channels were unable to coordinate live broadcasts? Or if a multinational company lost all information on their overseas employees? These ‘what if’ scenarios are as scary for companies as they are for employees. Businesses today are so dependent on ICT technologies that without them, many businesses would not exist. This is how crucially important ICT is to businesses.

Impact of Information and communication technology on business, StudySmarterInformation and communication technology, Pixabay

What is information and communication technology?

As the name suggests, information and communication technologies refers to all technologies that process information and are used in the running of a business.

Information and communication technology (ICT) is a computing and communication system that businesses might use to exchange information with stakeholders.

Some examples of ICTs are intranet, extranet, website, mobile apps, e-commerce websites, software robots, servers, cloud technologies, digital communication apps, and technology to facilitate work from home. Let's introduce them one by one.

Types of ICT used in business

  1. Intranet: A network used by employees of a business to communicate privately is called an intranet. Intranet is used to share ‘inside’ information on the company that the company does not want to go public. This may include training videos, employee information, or plans of the company.

  2. Extranet: Also a private network. Along with employees, other stakeholders like suppliers and wholesalers can also access the extranet of the company. Using the extranet, suppliers can communicate with employees about stocks or dealers can order the required quantity of goods.

  3. Website: Websites are now the ‘storefronts’ of a business. A commonly repeated factoid is that there are as many websites as the number of people in the world. The website lets the business talk to its customers directly and receive feedback.

  4. E-commerce website: Along with using a website for communication, businesses use their websites to sell their products. The buying or selling of goods using the internet is called e-commerce.

  5. Software robots: Chatbots are the most widely used software robots. Do you remember surfing on a random website when a pop-up comes up asking you if you need any help finding particular information? If you go ahead and reply, you communicate with a ‘software robot’ that helps you navigate better. Software robots are special software created to work as a virtual workforce.

  6. Servers: Servers are computers or programs that help client computers with the required information. Servers usually are ultrafast processing computers with a large storage capacity.

  7. Cloud technologies: Cloud servers let businesses store their data on the server of another company. If a company is using cloud service, then they don’t have to invest a huge amount of money in setting up their server.

  8. Digital communication apps: Many businesses use mobile applications to communicate internally. There are some apps like Slack or Google Workspace that help communication while working remotely feasible.

  9. Technologies to facilitate home working: Nowadays many businesses have adopted a work-from-home policy. There are technologies such as the Microsoft Office suite where people can work simultaneously on a single project. Zoom calls have also smoothened communication for larger groups of employees.

Role of information and communication technology in business

Now as we are aware of some of the ICT technologies, let us see how it has impacted businesses in recent times. We know that because of ICT, businesses are now more efficient at work. We can see the role of ICT in some aspects of businesses like the location of employees, collecting, storing, and analyzing information, e-commerce, and digital communication.

Location of employees

As per the statistics published by the Office of National Statistics in the UK, the proportion of adults who worked from home in 2020 increased to 37% on average from 27% in 2019. Many businesses ran completely remotely, without their employees reporting to work for the entire period of the pandemic. Even without a pandemic, many businesses have overseas units. Some businesses have production factories, call centres, or administrative departments overseas. Many businesses frequently outsource work abroad.

Many software technologies help employees around the world communicate effortlessly. Services like Microsoft teams or Slack provide a solution for informal communication and aid discussions, while Zoom calling provides a platform for large teams to communicate. Of course, there is an option of emails for formal communication.

The impact of ICT is so strong on businesses that now many businesses are replacing employees with technology. If you visit any McDonald's, you can place an order using their kiosk. In supermarkets, you have self-checkout counters. All these are examples of the impacts of ICT on employees.

Collecting, storing, and analyzing information

Data collection and analysis is probably the most important function businesses are now concentrating on. Proper data analysis can identify trends and customer behavior that in turn can help businesses decide on their strategies.

Different companies collect data differently, on different things. For example, Tesco collects data like frequently bought items, average money spent per order, what groceries are selling fast, etc.

Another mode for data collection is feedback forms. You may have given feedback about how you liked the service after talking to a customer service agent. The data collected will help businesses not only access their employee but also to improve their business processes.

After collecting the data, the business has to store it properly so that businesses can analyze it. Companies can invest in their servers to store data or use cloud services provided by Amazon or Google.

Data analysis is to find out the correlation between data to make conclusions that will help decision making. This could be a simple decision such as which flavour of Coca-Cola customers prefer in South London. If the answer is Diet Coke, then it does not make sense to fill all shelves with Cherry Coke.

E-commerce

Amazon, Uber eats, eBay, Facebook Marketplace, and Aliexpress are a few examples of e-commerce companies.

The buying and selling of goods that occur using the internet is called e-commerce.

The e-commerce that happens using mobile devices is called m-commerce.

Customers enjoy using e-commerce and m-commerce for many reasons: they can search for products and order and return them from the comfort of their homes. E-commerce provides access to thousands of products that would be impossible in a physical location.

Many clothing businesses have already established their e-commerce websites. E-commerce helps businesses capture new markets. Going online helps stores save huge costs of inventory and utilities. But they have to bear the cost of website management and setting up supply chains to cover more areas.

Check out our explanation on E-commerce and m-commerce to find out more about this topic!

Digital communication

Email, texts, webchats, videoconferencing, communication apps, and social media are all examples of digital communication. Some of the known names include Gmail, WhatsApp, Messenger, Zoom, Google Hangouts, Facebook, Instagram, and LinkedIn.

The communication where information is transmitted between two computers electronically is called digital communication.

Because of digital communication, businesses can communicate with potential customers (through websites), or stakeholders (intranet and extranets).

Many businesses use social media platforms to communicate with their customers. Twitter, Instagram, and Facebook are much-used by businesses to make announcements or collect feedback, or simply for marketing purposes.

Advantages and disadvantages of information and communication technology in business

ICT has helped businesses work efficiently and develop fast - but there are some drawbacks along with the benefits.

Advantages of ICT

  1. Fast communication: emails are quick, but chat on platforms like WhatsApp are quicker. ICT lets businesses communicate anywhere on the globe within a fraction of a second.

  2. Cost-effectiveness: working from home simply saves money and time. Efficient technologies reduce the time required to complete the task. For example, a tractor will plow better and faster as compared to the old way of using various practical tools.

  3. Better information security: private data can be better protected by ICT in comparison to paper files. Sensitive information can be protected using a high level of encryption. This tool can also save customers from fraudsters and identity thieves.

  4. Overcome cultural barriers: Technology does not differentiate between users based on religion, race, or gender. Technology also helps people understand different views and opinions.

Disadvantages of ICT

  1. Lack of security: Even though IT provides better security than traditional ways, it is still susceptible to external attacks like hacking or software viruses.

  2. Unemployment: Many information and communication technologies are replacing human employees. It is making many jobs such as customer support redundant. For instance, recent driverless car technology may replace all taxi drivers in the future.

  3. The initial cost of implementation and maintenance: It may cost a lot to implement and maintain a secure and user-friendly website. Also, businesses have to comply with new laws and regulations that are introduced.

  4. No human touch: Working from home has increased mental health concerns within individuals. Many businesses worry about their employees lacking human interaction. When it comes to chatbots, many customers wish to talk to a real person who can understand and solve problems faster rather than the software.

ICT is highly important for businesses to survive, compete, and grow. ICT has an impact on every part of the business from production, supply chains, marketing and sales, and business communication. There are many advantages of ICT like cost-effectiveness, efficiency, and security. But if not implemented properly, ICT can be disastrous to businesses because of disadvantages such the high initial cost of implementation, unemployment, lack of human touch, and cyber attacks.

Information and Communication Technology in Business - Key takeaways

  • Information and communication technology (ICT) are any computing and communication systems that businesses might use to exchange information with stakeholders.
  • A network used by employees of a business to communicate privately is called an intranet.
  • An extranet is also a private network. Along with employees, other stakeholders like suppliers and wholesalers can access the extranet of the company.
  • Software robots are special software created to work as a virtual workforce.
  • Cloud servers let businesses store their data on the server of another company.
  • The buying and selling of goods that occurs using the internet is called e-commerce.
  • E-commerce that happens using mobile devices is called m-commerce.
  • Communication where information is transmitted between two computers electronically is called digital communication.
  • The benefits of ICT are fast communication, cost-effectiveness, better information security, and no cultural barriers.
  • ICT also has disadvantages including the high initial cost of implementation, unemployment, no human touch, and cyber attacks.

Information and Communication Technology in Business

Businesses compute their sales, keep a track of employee attendance, and communicate with customers and other stakeholders daily. All the above-mentioned scenarios tell us that information and communication technologies (ICT) are becoming an inseparable part of the business on a daily basis. Because of information technologies, businesses can now process the data they collect and communication technologies help to coordinate things better. 

There are many advantages of ICT like cost-effectiveness, efficiency, and security. 

ICT has some disadvantages such as the high initial cost of implementation and cyber attacks. 

Intranet, extranet, e-commerce websites, software robots, cloud technologies, and digital communication apps are some examples of ICT and business activity.

Types of ICT used in business
  1. Intranet: A network used by employees of a business to communicate privately is called an intranet. Intranet is used to share ‘inside’ information on the company that the company does not want to go public. This may include training videos, employee information, or plans of the company.

  2. Extranet: Also a private network. Along with employees, other stakeholders like suppliers and wholesalers can also access the extranet of the company. Using the extranet, suppliers can communicate with employees about stocks or dealers can order the required quantity of goods.

  3. Website: Websites are now the ‘storefronts’ of a business. A commonly repeated factoid is that there are as many websites as the number of people in the world. The website lets the business talk to its customers directly and receive feedback.

  4. E-commerce website: Along with using a website for communication, businesses use their websites to sell their products. The buying or selling of goods using the internet is called e-commerce.

  5. Software robots: Chatbots are the most widely used software robots. Do you remember surfing on a random website when a pop-up comes up asking you if you need any help finding particular information? If you go ahead and reply, you communicate with a ‘software robot’ that helps you navigate better. Software robots are special software created to work as a virtual workforce.

  6. Servers: Servers are computers or programs that help client computers with the required information. Servers usually are ultrafast processing computers with a large storage capacity.

  7. Cloud technologies: Cloud servers let businesses store their data on the server of another company. If a company is using cloud service, then they don’t have to invest a huge amount of money in setting up their server.

  8. Digital communication apps: Many businesses use mobile applications to communicate internally. There are some apps like Slack or Google Workspace that help communication while working remotely feasible.

  9. Technologies to facilitate home working: Nowadays many businesses have adopted a work-from-home policy. There are technologies such as the Microsoft Office suite where people can work simultaneously on a single project. Zoom calls have also smoothened communication for larger groups of employees.

Final Information and Communication Technology in Business Quiz

Question

What is ICT?

Show answer

Answer

Information and communication technology (ICT) is a computing and communication system that businesses might use to exchange information with stakeholders.

Show question

Question

What are software robots?

Show answer

Answer

Software robots are special software created to work as a virtual workforce.

Show question

Question

Is extranet a public network?

Show answer

Answer

No, an extranet is a private network.

Show question

Question

What are cloud servers?

Show answer

Answer

Cloud servers let businesses store their data on the server of the other company. 

Show question

Question

Which of the following is NOT a digital communication app?

Show answer

Answer

Paypal

Show question

Question

Which of the following is NOT an impact of ICT on the business?

Show answer

Answer

Failure to implement change management

Show question

Question

What does the acronym ICT stand for?

Show answer

Answer

Information and Communication Technology

Show question

Question

How has ICT impacted the location of employees?

1. ICT made communication easier independent of the location of employees.

2. ICT made HR operations easier helping recruiters to hire employees from anywhere.

3. Advancement in ICT can replace employees in some roles with software robots.

4. Due to the advancement of ICT, employees can work collaboratively from anywhere in the World.

Show answer

Answer

All are correct.

Show question

Question

State True or False.

''Data stored in clouds can be affected by weather conditions near the business.''

Show answer

Answer

False

Show question

Question

Which of the following is a disadvantage of e-commerce?

Show answer

Answer

High website security maintenance cost

Show question

Question

State True or False. ''Data storing is not as important as data collection or data analysis.''

Show answer

Answer

False

Show question

Question

State True or False. An HR can communicate with the business employee using intranet''

Show answer

Answer

True

Show question

Question

''Digital communication does NOT include emails.'' - State True or False.

Show answer

Answer

False

Show question

Question

''It is impossible for businesses to communicate with the government using digital communication.'' - State True or False.

Show answer

Answer

False

Show question

Question

Which of the following are the disadvantages of ICT?

1. Lack of security

2. Unemployment

3. Initial cost of implementation and maintenance of technology

4. Fast communication

Choose the correct option.

Show answer

Answer

1, 2, and 3 are correct.

Show question

Question

___ is a computing and communication system that businesses might use to exchange information with stakeholders.

Show answer

Answer

Information and communication technology (ICT) 

Show question

Question

Some examples of ___ are intranet, extranet, website, mobile app, e-commerce website, software robots, servers, cloud technologies, digital communication apps, and technology to facilitate work from home.


Show answer

Answer

ICTs 

Show question

Question

___  is used to share ‘inside’ information on the company that the company does not want to go public.

Show answer

Answer

Intranet

Show question

Question

Using the ___, suppliers can communicate with employees about stocks or dealers can order the required quantity of goods.

Show answer

Answer

extranet 

Show question

Question

___ are special software created to work as a virtual workforce, for example, chatbots.


Show answer

Answer

Software robots 

Show question

Question

___ let businesses store their data on the server of another company. 


Show answer

Answer

Cloud servers 

Show question

Question

___ are computers or programs that help client computers with the required information. 


Show answer

Answer

Servers 

Show question

Question

Amazon, Uber eats, eBay, Facebook Marketplace and Aliexpress are a few examples of ___ companies. 


Show answer

Answer

e-commerce 

Show question

Question

The e-commerce that happens using mobile devices is called...


Show answer

Answer

m-commerce. 

Show question

Question

E-commerce and m-commerce are the same thing.

Show answer

Answer

False

Show question

Question

The communication where information is transmitted between two computers electronically is called...


Show answer

Answer

digital communication. 

Show question

Question

Private data can be protected by ICT better as compared to paper files.


Show answer

Answer

True

Show question

Question

Intranet is a network used within a country whereas extranet is a network used between countries.

Show answer

Answer

False

Show question

Question

Do you remember surfing on a random website and a pop-up comes up asking you if you need any help finding particular information? If you go ahead and reply, you communicate with the software  ___ that will help you navigate better. 


Show answer

Answer

robot

Show question

Question

It is oftentimes possible to replace employees with technology.

Show answer

Answer

True

Show question

More about Influences on Business
60%

of the users don't pass the Information and Communication Technology in Business quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Sign up to highlight and take notes. It’s 100% free.