IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON ORGANIZATION PERFORMANCE..

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The role of technology in the “Information Age” is well recognized by business, industry, and government and is completely woven into their organisational structures and strategic planning processes. Glover (1993) emphasized technology’s role when he said “that the quality of strategic planning is limited by the quality of information available to decision makers…” and that executive information systems were critical in furnishing the necessary data which produced information.  Business organisations, especially the banking industry of the 21st century operate in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. ICT directly affects how managers decide, how they plan and what products and services are offered in the banking industry. It has continued to change the way banks and their corporate relationships are organized worldwide and the variety of innovative devices available to enhance the speed and quality of service delivery.  Laudon and Laudon (1991) contend that managers of both public and private sector organisations cannot ignore Information Systems because they play a critical role in contemporary organisation. They point out that the entire cash flow of most fortune 500 companies in the world is linked to Information System.

At the corporate level, ICT represents an important venue for spending (Weill et al, 2002) as a vehicle for growth. Increasingly, many of the IT-related expenses are directed to developing nations (Roztocki, Pick et al, 2004). For example, during the period 2002-2004, 500 global ICT companies including Microsoft, IBM, Siemens, Alcatel, Motorola, Nokia, Intel, Hewlett-Packard and Oracle implemented over 1000 projects in developing nations dominating the largest share of ICT investments (O’Connell, 2004).

The ICT infrastructure evolved to become a critical factor driving productivity and growth in global economies with varying implications among developed and developing nations (Steinmueller, 2001). It is important for developing nations not to isolate themselves from the changes occurring due to the developments in the ICT globally (Gholami et al, 2004). This is partially because ICT is transforming the global economy and creating new networks that cross cultures as well as minimize distances. However, it is important to note that increased investments in ICT without the involvement of other socioeconomic factors may not improve growth in developing nations (Mbarika et al, 2003).

Information Technology (IT), also known as information and communication(s) technology (ICT), is a term that describes the combination of computer technology which is hardware and software with telecommunications technology such as data, image and voice networks. According to Lucas (1997), 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.

Performance is defined as valued contribution to reach the goals of an organization. Contributions can be made by individuals or groups of employees as well as by external groups. In the past, the measurement of performance was usually restricted to a financial perspective, resulting in various limitations like a focus on the internal aspects of the company, a limited transparency of the roots and causes of corporate performance, as well as late availability of performance-related information. In order to overcome these limitations, performance has to be considered as a multidimensional phenomenon (Steven, 2002).

Performance requirements are derived from the company’s strategy or vision as well as from its stakeholders, e.g. customers, suppliers or shareholders. However, it is not sufficient to focus only on the management perspective of the performance management concept. Like other management approaches, performance management can only be implemented successfully, if strategic planning is tightly linked to operational execution. Therefore, the integration of strategies, organisational structures and business processes by the use of specialised information technology is considered a vital part of performance management concept. It has to be ensured that strategy changes trigger modifications on the business process level and the supporting information technology, and that innovations on the information system or the process level initiate the adjustment of the company’s strategy. Due to different life cycles and varying actor groups, the alignment of strategy, business processes and information technology support often turns out to be difficult and expensive (Steven, 2002).