The use of ICT

From WikiTextbook

Information technology means the computer hardware and software used to handle analyse and communicate business data. The main software packages used are databases, word processors, internet, email and spreadsheets. ICT has influenced many areas of business.

Many businesses use ICT because ...
   * it allows fast access to data. Slow access may annoy customers.
   * it keeps storage requirements to a minimum. There is no need for large filing cabinets filled with lots of paper.
   * it allows data to be accessed by more than one person at a time.
   * there is better security. Data can be coded.
   * fewer staff need to be employed.
   * data is kept inside the computer system and cannot get misplaced.
   BUT... 	
   * computer equipment is expensive to buy and install.
   * staff may need to be trained to use ICT.
   * computers may fail to work or there may be a powercut.
   * data may be prone to hackers and viruses.

1 Stock Control and ICT
2 Credit Control and ICT
3 Marketing and ICT
4 Personnel Management and ICT
5 Finance and ICT
6 Other Areas
7 Contributors

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Stock Control and ICT

Modern stock control systems make use of bar coded information that is then scanned in to computers. This ensures that the computer knows exactly which products have entered and left the stock room. In a retail outlet an EPOS system (Electronic Point of Sale) is used to record exactly what has been sold, allowing up to date stock records to be kept. This data can assist in the decision of how much to order and when to order. It is possible to set up an electronic data interchange (EDI), this is a permanent electronic link with the suppliers that can automatically re-order stocks.

All of the information will be held in a database. This will make it easy for the business to carry out an aged stock analysis. This is a computer printout of the stock in order of its age, it makes it easy for the manager to make decisions about future prices and stock purchases, e.g., price reductions on any products that have been in stock for too long (sale) and reducing the orders for types of stock that have been lying around for too long (size or colour).

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Credit Control and ICT

Credit control can be difficult for a business as every request for payment can lead to an argument, however businesses must not be seen as a soft touch otherwise they will fall into cash flow problems and possible go out of business. Good database analysis can help reduce the problems of bad debtors.

An aged debtor analysis will put customers in order of the age of debt outstanding. It can also provide information such as the amount of the debt and previous payment times. Instead of sending threatening letters to all debtors (people who owe you money) and risk losing goodwill, it will be possible to focus upon persistent late payers.

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Marketing and ICT

Databases can provide businesses with up to date mailing lists that can be used for direct marketing campaigns. Letters can be personalised and sent out in groups to people with similar characteristics. Tesco compile mailing lists from their clubcard applications. Records of what individuals purchase can then be compiled on a database (using the EPOS system) and marketing campaign can the be specifically targeted at groups with certain spending patterns, e.g., if Tesco were to hold a wine tasting evening they would only mail those who have a record of purchasing wine on the database, thereby reducing the cost of sending out letters to those who do not buy wine.

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Personnel Management and ICT

Databases can be used to keep staff records. These records can then be used in payroll management, where basic pay, tax, national insurance, pension contributions and bonuses are calculated. A more sophisticated programme could link this to a calculation of a workers output or sales from which bonuses could be calculated.

Performance indicators such as labour turnover, absenteeism, productivity, quality defects and lateness can all be linked into the programme allowing the personnel manager to identify any trends and take action to remedy them.

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Finance and ICT

Information could be held on a spreadsheet. This can be manipulated to automatically produce profit/loss accounts, balance sheets and cash flow forecasts. This will save a great deal of time for the business leading to substantial cost savings which can lead to an increase in the overall profit levels. The vast majority of companies now use spreadsheets as they can be linked to stock systems, such as EPOS. Also, numbers are easier to manipulate on a computer (rather than by hand), and spreadsheets can easily work out tax. Also, ICT allows businesses to reproduce their financial information quickly and accurately (which will be useful for public and private limited companies).

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Other Areas

ICT is used in many areas of business to try and improve efficiency, reduce costs and improve customer satisfaction. Examples of ICT use within a business are:

Electronic communications between departments and people outside of the business, for example through the use of e-mail and the intranet/internet. This provides a quick and cheap method of communication. Also, the internet can be used by the business to recruit new employees when necessary;

Facilities to share common data such as stores records, employee records, financial data, orders. This allows different departments within the business to view information held on a central computer that will help their planning for the future;

Security systems must be put in place, for example virus protection, backup against loss, confidentiality/password protection. These are important as they will prevent information being lost due to viruses or stolen by hackers;

On line support for customers by showing order progress, new products, allowing on-line sales and responding to queries. This will make it easier for customers to make purchases from the business which may increase their levels of sales;

It is also important businesses consider the link between ICT and the real world, and the potential security risks - that is, computers must be protected not only against hackers, but also from normal theft. For example, a laptop with bank details on would be very valuable to criminals; firms have to take care not to let such people have access to them.

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