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FREE online courses on Information Technology - Chapter 1 INFORMATION TECHNOLOGY - What is Information Technology


Information technology refers to all forms of technology applied to processing, storing and transmitting information in electronic form. The physical equipment used for this purpose includes computers, communications equipment and networks, fax machines, and even electronic pocket organizers. Information systems execute organized procedures that process and/or communicate information. We define information as a tangible or intangible entity that serves to reduce uncertainty about some state or event.


Data can originate from the internal operations of the firm and form external entities such as suppliers or customers. Data also come from external databases and services; for example, organizations purchase a great deal of marketing and competitive information.


An information system usually processes these data in some way and presents the results to users. With the easy availability of personal computers, users often process the output of a formal system themselves in an ad hoc manner. Human interpretation of information is extremely important in understanding how an organization reacts to the output of a system. Different results may mean different things to two managers. A marketing manager may use statistical programs and graphs to look for trends or problems with sales. A financial manager may see a problem with cash flow given the same sales data. The recipient of a system's output may be an individual, as in the example of the marketing manager, or it may be a workgroup.


Many systems are used routinely for control purposes in the organization and require limited decision making. The accounts receivable application generally runs with little senior management oversight. It is a highly structured application with rules that can be followed by a clerical staff. A department manager handles exceptions. The output of some systems may be used as a part of a program or strategy. The system itself could be implementing a corporate strategy, such as simplifying the customer order process. A system might help managers make decisions.


Information technology, however, extends far beyond the computational capabilities of computers. Today, computers are used extensively for communication as well as for their traditional roles of data storage and computation. Many computers are connected together using various kinds of communications lines to form network. Through a network, individuals and organizations are linked together and these linkages are changing the way we think about doing business. Boundaries between firms are breaking down from the electronics communications link provided by networks. Firms are now more willing to provided direct access to their systems for suppliers and customers. If the first era of computing was concerned with computation, the second era is about communications.



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