Information and Communication Technology in Business

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.

Information 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.

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 behaviour 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.

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.

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.

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

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.