Information Techonoly (IT) is business. Making money trough IT.
|stuff you never thought you wanted to know.
Information Technology is business! Information Technology
is money! Doing business with Information Technology.
Written by Jon Berg <jon.berg|a|turtlemeat.com>
When you hear talk about business in the Information Technology area
the 2000 dot com bubble comes to mind for many. Inflated stocks that represented
companies that generated little or no earnings. This hype do not represent the
real value of IT. Everything in IT comes down to how a company can increase
effectiveness in it's workprocess to generate more money.
Business is business
IT is just the next revolution / evolution in the business race. Many similarities
can be drawn to the Industrial revolution where machinery, engines and electric
power shifted work from hand labor to more effective ways of producing things
with machines instead. The result was better products, faster ways to produce
products, lower price on products and less need for human labor.
IT as an investment
The following chart shows a business earnings with and without an investment
The green line shows the earnings of a company that makes no investment in IT.
The green company earns a little money slow and steady.
The blue line shows a company that makes an investment in IT. There are three
#1 During the develop time of the IT system the company incurs increased cost.
The company has to pay for the new system. Work is done in the same way as before.
#2 When the IT system is finished, there will be a period where the system is
being integrated into the business. The employees will have to be taught how
to use the system. This will disrupt the normal work flow and earnings.
#3 The new IT system is integrated in the business and work will be more effective
and the earning curve will be steeper. The business will now earn money faster
What the chart shows is that when the IT is in place a business will earn more
money and faster than before. The business have made some investments / incurred
some expenses when buying the new system, so it will take some time before it
catches up with the earnings it would have had if it did not buy IT. As brake
even is passed earnings outperforms, and IT earns you money.
More earnings faster
What makes the earning speed up? When the business have purchased a
IT-system it will be able to do something faster or cheaper. Here are some simple
examples. Moving from paper to electronic documents represents how to do something
faster. If a business register a lot of numbers in various documents, an IT
system could help you register these, maybe this registration could be done
automatically, the retrieval of documents could be done efficiently in contrast
to manually finding a document, searching for particular things could be done
without manually going trough all documents. Salaries for people working in
a business are a major expense, so cutting people working for you is a good
way to do things cheaper. A web store is a good example of this, instead of
having to pay for housing and sales people, you can sell products through a
IT system where the buyers does most of the work themselves.
Workers of the world unite! You're fired!
As with the industrial revolution there where concerns that the new
mechanized machines took over much of the work and that everybody would be unemployed.
In the IT revolution this is also a concern. Computers can potentially do most
of the work that real people are hired to do. From driving a bus, to being a
checkout clerk at the supermarket. The only problem is the cost of the investment
for such a system as discussed previously. For the time being it is cheaper
to hire some underpaid person to do that job. In the future such systems may
become very common and cheap.
The holy grail. (Concluding remarks)
There are no holy grails in business. Information Technology opens some interesting
opportunities for a business to become more effective. You can also fail with
purchasing new technology as with other aspects of doing business. Investments
must reflect a business plan, and if this is not thought through it will probably
fail. If the purchase do not justify the cost at some future point, it will
be wasted money.
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