How Technology Affects Business Operationsby Edward Mercer
Technology -- including everything from physical devices to information technology networks -- has a deeply transformative influence on the modern world and economy. From changing consumer preferences to reshaping the way businesses produce and market goods, technology can be seen even in the smallest details of day-to-day business operations, increasing the productivity of workers and investments, accelerating economic activity, promoting interdependence between industries and allowing for the continual deployment of new technologies -- and also creating new business risks.
Through process improvement, developing worker skills and product development, technology tends to increase productivity in business operations. While the exact size of that improvement is still a matter of academic debate, technologies like email make communication about business operations considerably faster and easier, increasing the overall productivity of workers. Technologies like online customers service and customer support pages also reduce the need for personal attention and increase the productivity of investments in these areas without sacrificing customer experience.
Whether through faster airplanes or online data transfers, technology tends to accelerate the rate of business operation. What once took weeks through the mail or face-to-face interactions can now be accomplished in seconds with a keystroke. Online money transfers, Web purchasing and Internet file sharing all tend to accelerate the production cycle, making the capitalization, production, sale and distribution of goods considerably faster. From an operations standpoint, technological acceleration both forces companies to move faster to meet consumer demands and provides the tools for them to do so.
Globalization and Interdependence
The ease with which companies can communicate and transfer resources on a global scale makes them more likely to conduct business with a global web of clients and suppliers. Technology like Internet video conferencing and instant access to economic data from around the world makes it just as feasible to conduct business or make investments in a neighboring town as doing so on another continent. Technology facilitates this integration and interdependence through improvements in transportation, logistics and communications.
As technological innovation makes consumers want new types of products, businesses have to adjust their operations to meet new market demands. Businesses integrate new technologies, such as computers and software packages, into their daily operations and production cycle and provide new products such as increased mobile compatibility for a line of electronics. Driven by consumer desires for new technological goods and more convenient technological services, businesses can compete with each other based on their pace of innovation and adoption of new technologies.
Although adopting new technology can be very beneficial -- even necessary -- for a business, every new technology also presents a unique set of new risks. Without proper employee training in how to use a new software system, for example, technology can actually decrease productivity and even reduce employee satisfaction. The rapid migration of personal and corporate operations data to online databases also makes companies more vulnerable to cyber-attacks that can adversely affect operations or shut down a business altogether.
- link Columbia University: How Does Information Technology Affect Productivity? [PDF]
- link Massachusetts Institute of Technology: Information Technology and Productivity -- A Review of the Literature
- link Ernst & Young: Rapid Technology Innovation Creates a Smart, Mobile World
- link Bryant University: The Age of Globalization -- Impact of Information Technology on Global Business Strategy
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