Investing In It The Use Term Paper

Length: 11 pages Sources: 6 Subject: Business Type: Term Paper Paper: #69245787 Related Topics: Financial Reporting, Internal Control, Developmental Stage, Information Assurance
Excerpt from Term Paper :

This implies that there should be a movement towards measurements that have a more balanced scorecard and dashboard which will be healthy though there is a risk of developing an internal evaluation bureaucracy and lose of credibility if not updated and focused on parameters that are critical to the company.

The other aspect that is also crucial to the introduction of information technology is the amount of usage, when information technology introduced in a company is not used or is underutilized then it ends up wasting the company's money. In order to extract value from information technology investment that a company makes, it needs to involve people. In most cases when a company does not give an opportunity for nor funds organizational learning and adjustment that is necessary then the information technology will not be used optimally thus being a disappointment. There is a tendency for companies to concentrate on the operational complexity of implementing information technology rather than educating the staff to be competent in using it and deriving maximum benefits from it.

Information technologies widely differ and so do their costs and ways of getting business value from each information technology also differs. For instance when the information technology investment to be undertaken involves infrastructure investment then it can not be compared to a point solution for a specific business process which is also self-contained. When information technology is not given a portfolio approach then it is a problem since information technology has different purposes and requires different measurement regimes. Information technologies also do deliver business value through different ways and up to different levels, that is to say that one information technology may deliver business value better then another. Organizational variations in information technology exists considerably, therefore, embedding a right measurement regime as part of the routine management will help a company know its position. It is also recommended that this is linked from the business strategic to the information technology operational level, and across the lifetime of the system, but this is rarely enacted. Good measurement and actual improvement in the business use of information technology have been found to correlate.

Another important aspect is the attitude of the senior executives towards information technology, in some organizations executives who have no faith in information technology fear. In such cases, the existence of information technology has to be continually justified and traditional measures used to judge, this leads to self disappointment and under-funding. On the contrary some executives view information technology as asset and consider what benefits the company will get from it. Such executives usually get more business value from their information technology since they usually give a clear business focus to the measurement systems and investment of information technology. Their confidence on the business value of information technology also leads them to focus on key metrics and results rather than on exhaustive measurement data. In line with the above, there are certain traits that are considered to be possessed by effective information technology users which include listening to technology and getting informed by global dynamics of new trends. Such individuals also govern information technology as a strategic, business-focused portfolio. The chief information officer of a company should also be credible and influential among senior business executives.

When a company intends to introduce or improve its information technology but lacks the aspects that are necessary to derive business value from the information technology then the company will be considered not to be ready and this is usually the crossroad for finance and technology. It is recommended that a method used for assessing technology readiness considers the smooth integration of new products with downstream design and manufacturing process, the performance should also meet the expectations of the user's environment (Clausing and Holmes, 2010). When the assessment for technology readiness is not present then unstable performance will cause a disruption in the later stages in the process of development. A technology readiness process that is well structured should include a development process that makes the technology more stable thereby performing as earlier expected. The degree of technology readiness and potential risks should also be measured before proceeding to developmental stages, this...


For a company to enjoy the full potential of any new technology and implement it smoothly then the new technology should be in an environment that enables it operate realistically, however, when technology readiness is not incorporated then the business value may not be easily realized. In order to realize this readiness it is also necessary to have corporation between the information technology department and the others within the organization, especially the finance department (Marshall and Mullen, 2004).

The study carried out by Jory and others (2010) indicate that there is a favorable reaction of stock market to corporations that invest in SOX 404 -- related information technology but further reports that a difference existed between firms with reported internal control weaknesses. This still points out to the factor of readiness of the company and such a company may not derive any benefit from investing in information technology. The perception of investors is that when a company has strong control environments then investing in information technology will give more profit than the costs incurred. Does this mean that some firms need not to conform to the requirements of SOX 404? What it actually means is that the firms should undergo a process that will prepare them for the information technology introduction or improvement in order to reap the benefits associated with it. This is one of the best options for such firms since the only other option left is for them to run out of business or alternatively merge with other firms. This is how cruel the need for information technology can be when a firm is not prepared.

Even though it is the benefits of information technology or technologies in general that are being talked of loudly, introduction of such technologies can also have some undesirable impacts especially when a firm becomes completely dependent on the technology. The first feature of the current technology is automation of most if not all tasks in a firm, this is usually an admirable feature and treated as innocent as it looks not until the system fails. When the firm was fully dependent on the automated system then a failure literally means no more continuation of the tasks until the system functionality is restored. This will affect the smooth flow of the processes in the firm. The next problem that will be experienced is staffing since in most cases when a firm has not introduced a new technology then the available staff can only operate the old or manual system. This is a great problem since the staff will require to be trained and the training process is usually more complex and costly and this will translate to increase in the overall expenditure of the firm.

In a manual system there are some checks and balances that ma exist and an introduction of an automated system will eliminate such checks and balances. New technologies are also known to eliminate some particular types of fraud and embezzlement, however, when they eliminate some they also encourage others. Among all these problems the over-reliance on information technology by a company since when the system malfunctions then severe difficulties are faced by the company. The direct effect of such a failure is usually felt by those working in departments that require direct access to database management system, such as accounting. There are also chances of workers loosing their jobs since efficiency and productivity of the department is increased by the database system. Even though when a staff member loses a job it is often viewed as the loss of that individual in some instances the company loses some expertise that may be very necessary for the company at a later date and may not be readily available.


There are many advantages of information technology and true globalization has only been achieved through the introduction of automated systems. The existence of a single interdependent system enables sharing of information and blocks linguistic barriers across the continents. The high speed of communication and the low costs involved can only be attributed to technology. The introduction of computerized internet business processes have lured a good number of business to the internet and in the process have been able to increase their productivity, profitability, and take advantage of free working environment and a world wide reach of the market. Valuable ideas from diverse cultures can now be exchanged which has led to a reduction of prejudice and an increase in sensitivity. It is now possible for businesses to remotely operate round the clock. Information technology has revolutionized communication and specialists in…

Sources Used in Documents:


Baker, M.W. & Roberts, F.D. (2010). Business tools: The next quantum leap, Strategic finance

Clausing, D. & Holmes, M. (2010). Technology readiness, Industrial research institute.

Gill, R. (2011). Why cloud computing matters to finance, Strategic finance

Jory, R.S. et al. (2010). The wealth effects of investing in information technology: The case of Sarbanes-Oxley Section 404 compliance. Review of accounting and finance, 9(3): 285-305.

Cite this Document:

"Investing In It The Use" (2011, March 24) Retrieved December 2, 2022, from

"Investing In It The Use" 24 March 2011. Web.2 December. 2022. <>

"Investing In It The Use", 24 March 2011, Accessed.2 December. 2022,

Related Documents
Investing in a New Production Facility the
Words: 1415 Length: 4 Pages Topic: Business - Management Paper #: 45418680

Investing in a New Production Facility The automobile industry is increasingly taking advantage of the optimistic automobile market through producing more technologically sophisticated and luxurious motor vehicles. The vehicles despite targeting the wealthy in the society have been received positively by the automobile market. Particularly the four-wheel-drive model has become popular for two major reasons, image and up-country drive particularly on complex landscape. Having identified its personal interest areas, ABC Company

Investing Capital Mutual Fund Investing Is Important
Words: 2055 Length: 6 Pages Topic: Economics Paper #: 33337661

Investing Capital Mutual fund Investing is important for it ensures that at the end of a certain period you can benefit out of your invested money. Investing can be done through investment funds. Investing funds are collective investment schemes that require investor to create a pool of capital and in return the investor enjoys wide diversification, professional management, and lower costs that would have been otherwise impossible using a small amount of

Investing in Walt Disney Company Characteristics of
Words: 987 Length: 3 Pages Topic: Economics Paper #: 8011589

Investing in Walt Disney Company Characteristics of its bonds Apparently, Disney's bonds seem to be in an enticing situation. After a dip during the past years, Disney's bonds seem to be in great demand. In June of this year -- little less than 3 months ago - it offered a 3.75% banking 10-year paper with over $25mm. This was the hot-shot then, specially in a time when post-holiday trade was lax, and

Investing in a Company the
Words: 1410 Length: 5 Pages Topic: Business Paper #: 24999831

The slight decline in the cash ratio is not considered to be of significance in light of the generally solid current and quick ratios. The improvement in times interest earned comes in the face of a significant increase in long-term debt at PepsiCo. The company's debt ratio increased to 50.2% from 48.6%. This was largely a consequence of a nearly 65% increase in long-term debt. Pepsi's operating margin is 18.1%,

Investing Decisions Congress Insider Trading
Words: 607 Length: 2 Pages Topic: Government Paper #: 92084518

They are definitely a group that is picked for their passion for government affairs and who keep abreast of economic trends that affect the country. Also, it is not necessarily the case that one who has insider knowledge will necessarily use it. One legislative aide remarked that he bought his shares at 12:50 P.M. On a date well after it was widely reported in the media. It is extremely important that

Investing and Globalization
Words: 718 Length: 2 Pages Topic: Economics Paper #: 37130415

Comparative advantage states that mutually beneficial exchange is possible whenever relative production costs differ prior to trade. Nations gain by producing goods at relatively low costs and exchanging their outputs for different goods produced by others at relatively low cost. Thus, all potential trading partners can gain enormously through appropriate specialization and exchange. A country has an absolute advantage in producing a good if production of the good absorbs