The Impact of ICT in Commerce

1. The Impact of ICT in Commerce

2. Mainframes • The earliest computers were what we now call mainframe computers • The first commercially available computers appeared in the 1950s (e.g. LEO, shown right) • Mainframe computers centralise the processing and use dumb terminals, which are often text only – they do no processing, and are effectively just monitors and keyboards • Centralised processing fell from favour in the 1980s as PCs became cheaper and smaller • Centralised processing was really an extension of the back office or admin function, and so didn’t change the nature of the organisation greatly.

3. Personal Computers • Everyone now has their own PC – processing is dispersed throughout the organisation • This changed working practices, as everyone had access to data processing facilities • Managers could now type their own letters and enter information directly into databases – this can lead to a flattening of the management hierarchy as admin is distributed across the organisation, and typing pools (such as the one above) and filing are a thing of the past.

4. Computers and Storage • Offices full of files (like the one on the right) are a thing of the past • Storing information on computers has many benefits: • There is less need for costly office space • It is quicker to store and retrieve information – there’s no need to get the step-ladder out! • Sorting and searching makes it much easier to manipulate data… • Imagine a client left a message but you couldn’t make out their name, but you had a record of their phone number; how could you find out who it was in a manual filing system?

5. Centralised Storage • Storing data centrally also has big benefits in terms of redundancy - all users are using the same data which can easily be kept up to date • The DBMS needs to be careful to maintain the integrity of the data through record-locking • What happens if two users try to update a record at the same time? • prevent access to records in use? • make open records view only? • lock open records so that they can’t be changed? • lock related records? • lock the whole table?

6. Distributed Databases • ICT can sometimes create new technical challenges • What if the organisation is large and data is needed all over the country? • Maintaining communications links to a centralised database could be expensive and would create dependence • Another approach is to distribute the data throughout the organisation so that all users are not connecting at the same time over costly communication lines • But how would this be done?

7. Appointment North East South West Ipswich Norwich Kings Lynn John Janet Appointment Example • The head office has all the data for the whole company Head Office • Each region stores only customers in that region • Each branch will only store local customers • Each adviser only has his/her own client records

8. North East South West Head Office Ipswich Norwich Kings Lynn I’m off to Kings Lynn! • Such transfers might only occur once a day John Fred

9. ICT in Existing Businesses • The power of ICT to store, process and communicate data has led to big changes in existing sectors such as retail and banking: • Salaries, pensions and benefits can be paid straight into your bank account • 20 years ago you had to queue up in the bank if you wanted some money – now you can use an ATM • Internet bank allows people to pay bills and transfer money without leaving the house – we can even have paperless billing from utility companies • Digital telephone exchanges make more complex phone systems possible – e.g. selecting services and entering account numbers • Lots of high street retailers now accept orders on-line – e.g. HMV, Next and Argos

10. Telecomms for Competitive Advantage • ICT can be used to speed up or simplify business existing processes - e.g. mail order, customer management • For example: • customers can order goods via a web-site, a confirmation e-mail is sent, and the goods are dispatched from the warehouse - no money needs to be sent, or order forms filled in and posted. • sometimes the goods can even be downloaded directly from the web-site, e.g. software, video clips. • customers can view their account activity on-line and track orders, and there is less paperwork for the company - they could even have automated “pickers”

11. Case Study - Guardian Royal Exchange • Old “manual” system: • an advisor visits the customer, completes forms outlining cover requirements and budget and posts them to the head office • actuaries at the head office produce the “illustration” (quotation) and send it to the advisor • the advisor returns to customer with the illustration • if the customer agrees, the “proposal” form is completed and the paperwork is sent off to the head office • There was a 60% rejection rate due to proposals being completed incorrectly, or illustrations being done for ineligible customers, etc.

12. Case Study - Guardian Royal Exchange • New “computerised” method: • The advisor visits the customer with his laptop and enters the customers personal details • The software suggests suitable products and performs “illustrations” • If the customer chooses to buy, the “proposal” is completed on the laptop and printed out for the customer • Back at the office, the advisor plugs the laptop into a phone-line and transmits the data to head office. • Using this method, the advisor can complete the sale in one visit, and use of cross-field validation, etc., reduced the rejection rate to less than 2%!

13. Social Implications • There can be resistance to using new technology • this can lead to systems lying unused • in the GRE example, so few advisors wanted to use the laptops that they introduced a higher commission rate for policies transmitted electronically • The workforce will need to be trained to use new systems • Sometimes companies introduce new ICT systems with the intention of reducing the workforce - in the GRE example they would have been able to get rid of head office actuarial staff

14. New Businesses • As well as transforming old businesses, the introduction of ICT has led to the creation of new products and services. • 15 years ago no-one had heard of: • Internet Service Providers and Search engines – AOL and Google are now amongst the world’s largest companies • Amazon and other .com companies • Mobile phone shops • Web-design companies