The Impact Of Exponential Information Technology
Over the past two decades, global organizations throughout the world have faced a myriad of challenges, in particular due to the rapid development of Information Technology (IT). The hypothesis I will be assessing is as follows: the exponential growth of IT during this time period has not only helped businesses expand, but posed its own set of challenges along the way. In order to carry out a thorough analysis of the above, I will examine numerous factors which might affect it. These include: a general analysis of the challenges faced by growing businesses, an overview of technological advances throughout the 21st century as well as how and why IT has allowed organizations to expand on a global scale. I will also analyse in detail the IT-related challenges faced by these organizations, how they might prevent and mitigate these challenges and how successful businesses have not only learned how to meet these challenges but have also used them to their advantage to beat the competition.
General Analysis of the Challenges faced by Growing Businesses
Today, globalization is occurring at an exponential rate and it affects all industries across the world. Therefore organizations are facing numerous challenges. These include: perpetual pressing political factors, communication difficulties and cultural differences and an unprecedented level of competition within every industry. In today’s political climate that is fraught with danger, there are many elements organizations must be aware of when operating on a global scale: religious conflicts (in the Middle East in particular), safety and security (for example in dictatorships in South America), and corruption and lack of government accountability (like with Siemens ). There are also several communications hurdles that need to be overcome when businesses operate in numerous countries, for example: different time zones, cultural differences, lack of education in developing countries and cyber security. Every country presents a unique set of challenges organizations have to overcome when entering a new market. Furthermore, it is important to note that the business landscape has been completely transformed with an increased number of start-up success stories and also with the rise of entrepreneurs. This has, largely, disrupted the traditional business model as many of today’s billion-dollar net worth individuals utilized a lean start up canvas instead and became tremendously rich overnight.
Overview of Technological Advances throughout the 21st Century
The strides that have been made in IT over the last two decades have been so mammoth that they were unthinkable to the average human being even just a few years prior to their genesis. These advances have been pivotal to global businesses and their ability to expand. The emergence of the following have been particularly important: mobile technology (most crucially the birth of the smartphone), “Wi-Fi” becoming a household term, Voice over IP (VoIP) replacing traditional telephone lines, the unprecedented popularity of social media, and the invention of cloud computing as well as Artificial Intelligence (AI). Perhaps the most critical technological advance that the eve of the 21st century saw was the development of optical fiber cables for information transmission. This development is what accelerated and made all of the above possible. First developed in the 1970s, but its full potential not being realized till years later, fiber-optics has revolutionized the telecommunications industry. Because of its advantages over electrical transmission, optical fiber cables have largely replaced copper wires in the developed world and have therefore been a game changer for global businesses.
Additionally, there was a huge jump in broadband internet usage globally in the 2000s alone – for example, it comprised only 6% of U. S. internet users in June 2000 and one mid-decade study predicted 62% adoption by 2010. How and Why IT has allowed Organizations to expand on a Global ScaleEvidently, the above mentioned developments in IT, to name a few, have been invaluable in helping businesses, both small and large, expand on a global scale. The use of online collaboration tools, such as Slack and Trello, is a basic example of how organizations can work together at a global scale via the internet. Virtual meetings can also be staged via systems such as Blue Jeans or G-Suite by Google. A more complex example of technology allowing for global expansion of organisations is cloud computing. Amazon Web Services (AWS), has been truly instrumental for thousands of businesses’ development. It is used by thousands of companies to increase productivity by saving both time and money. According to Amazon, AWS has helped organisations “build innovative solutions, migrate critical applications, and improve their financial position by retiring costly legacy technology” and cites that enterprises using AWS have seen up to 51% reduction in cost of operations and up to 25% increase in developer productivity.
The first success story is a historical example. I will analyse is that of British Airways (BA) and its use of information systems to better serve their customers. It is an example of how technology was beneficial to an established, well-known organization almost three decades ago. Today, British Airways is the largest airline in the United Kingdom, based on fleet size. It was established in March 1974 and is listed on the London Stock Exchange. By the late 1980s, customer recovery was crucial for the airline. The company discovered that over one third of passengers were dissatisfied with their BA experience. The airline had been losing thousands of customers due to lack of customer service and extremely long response times (often up to 12 weeks) for those who complained – although 69% did not even bother in the first place because the customer service was so bad. Evidently, something had to be done to ensure customer retention.
In 1994, British Airways implemented the Customer Analysis and Retention System (CARESS). This was a paperless information system that ensured speedy response times to customer complaints. At the time, BA invested GBP 4. 5 million in CARESS. The system allowed for a scanned image of complaint letters to be stored and included a powerful database to record all customer communications. IBM worked with Space Computer Systems to design and implement the system and the hardware consisted of 60 workstations for customer service representatives. Before CARESS, complaint letters were constantly getting lost due to archaic filing systems. Following its implementation, BA reported that it retained 87% of its customers and, after CARESS had been at work for a year, customer service representatives were netting satisfaction ratings of up to 95% and BA concluded that the initiative had paid for itself within the first year.
Evidently, even three decades ago, IT helped businesses grow and become more profitable. Case Study 2: Netflix A major success story for a smaller and less traditional organization is that of Netflix. Today, Netflix is the most widely used video on demand (VOD) streaming site in the world as it has a myriad of content for its viewers, as well as now also producing its own movies and TV shows. However, Netflix started out very differently. When Netflix was founded by Reed Hastings and Marc Randolph in 1997, it was following a subscription based DVD-by-mail business model. This meant that at its inception, Netflix depended on the US Postal Service to deliver DVDs to subscribers, who, at the time, paid $4 per movie and $2 in shipping costs. In February 2007, Netflix began to move away from its original core business model of DVDs, by introducing video on demand via the Internet.
Thereafter, Netflix’s growth was rapid, as DVD sales fell from 2006 to 2011. Netflix had been dedicating cash to investment in VOD for some years, including $10 million in 2006 and another $40 million in 2007. Given the pace of technological advances at the time, it was imperative for Netflix to have a functional VOD option in place. Thanks to these and other investments that Netflix made in technology back in the early 2000s, Netflix made huge strides in the years to come. In 2017, revenue was almost $11. 7 billion. Furthermore, in January 2016, Netflix announced plans for the global expansion of its services to 190 countries, which, of course, would not have been possible without the internet. Furthermore, Netflix uses AWS cloud for almost all its computing needs and uses more than 100,000 servers. As most companies using AWS have experienced, Netflix’s costs have been reduced with AWS. More importantly, however, by using AWS and one of its data streaming services called Amazon Kinesis Streams, Netflix benefits from being able to monitor everything in real time. This allows it to recognise issues in real time, address those issues and as a result, Netflix has outstanding customer experience. It is clear that Netflix is a key example of how IT advances have disrupted the traditional home entertainment industry.
Analysis of the IT-related Challenges faced by Organizations
As with most things, the exponential rise of technology has not come without its internal challenges. In addition to the previously mentioned external factors (such as politics and regulations), there exist a multitude of IT-related challenges that organizations must deal with in order to succeed and expand. These include: cyber security threats, humans being unable to keep up with the pace at which IT is advancing, at what point in time organizations should invest in premature technologies, and the mixed response to Artificial Intelligence (AI). The most critical challenge faced by organizations is that of cyber security threats. According to Forbes, recent global security breaches have affected over 200,000 computers in 150 countries. Data breaches are a constant feature on the news cycles in recent times and this is a huge cause for concern.
For example, ride-sharing service Uber has been the victim of some major hacking incidents. The first was in 2014, when around 110,000 Uber drivers information was compromised. The second that transpired in 2016, however, was a much harder hit. 57 million records of both drivers and riders alike were exposed. Uber made the mistake of trying to hide the 2016 breach by attempting to pay off the hackers with $100,000 in ransom money. Over a year later, in November 2017, the breach was exposed and the company experienced major backlash for trying to cover it up. Understandably, Uber users were angered by their personal information being uncovered. Uber’s $68 billion valuation was impacted and an investigation into the data breach was launched.
On September 26, 2018, Uber settled the investigation for $148 million. Evidently, when organizations are vulnerable to hackers, the consequences can be damaging, both to their financials, but also to their reputation. A further example of a data breach that affected a wide range of people is that of Facebook. Having previously been victim to multiple hackings, this September saw Facebook admitting to the biggest one yet. An attack on their network resulted in the exposure of the personal information of over 50 million users. This sparked an outrage among Facebook users, and reminded them that, as detailed by the New York Times: “the recently discovered breach was a reminder that it is exceptionally difficult to entirely secure a system that has more than 2. 2 billion users all over the world and that connects with thousands of third-party services. ” There is no doubt that Facebook’s continuous privacy issues in recent years have triggered users to re-think having an account with the service, which evidently is not as secure as it should be.
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