How Information Technology Has Revolutionized Business

Other than war, the biggest driver of technological innovation is commerce, and the information technology revolution of the past half-century continues to fuel new innovation at an accelerated rate.

In businesses today, large and small, information technology is what drives many of the incredible innovations we have seen over the past few decades including everything from checkout counters to customer relations management systems like Salesforce that are at the heart of a growing number of businesses. But what is information technology exactly, and how is it responsible for one of the largest business revolutions in the history of commerce?

What is information technology?

How Information Technology Has Revolutionized Business
Source: Pixabay

Information technology is a specific sector of the economy that is responsible for the building of computer systems, the programming of them, and the management of computer networks. What makes information technology so significant is right in the name: information and the processing of data into information at speeds that are exponentially faster than anything the human mind is capable of achieving.

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This includes the creation of that data—which is distinct from information—, the gathering and efficient archiving of that data, and the transmission of that data across networks. Data becomes useful information to us once it has been analyzed and processed, so information technology is also the development of the mechanics of that processing or analysis, usually in the form of algorithms that take the data as input and produce the useful information that we are looking for.

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This is especially important for businesses, as even small companies interact with a large number of customers and, in doing so, end up producing thousands or tens of thousands of data points every day. Even after modern business practices evolved into the sophisticated rules, techniques, and accumulated knowledge of the economy we know today, it wasn’t until the widespread introduction of information technology into the business world during the 1960s and 1970s that these data points began to be utilized.

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How information technology improves the practical business of the economy

How Information Technology Has Revolutionized Business
The New York Stock Exchange is entirely dependent on information technology to operate.  Source: Ryan Lawler/Wikimedia Commons

Merchants and government administrators have long used technology to keep track of receipts, prices, taxes, and inventories. The very first cuneiform tablets in Mesopotamia were business documents used to track the number of goods bought and sold. So, from the very beginning of human writing, commerce has been a driving force behind technological innovation.

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These innovations are all born of necessity though, so as technologies were developed to make the business of commerce and administration easier to manage as trade grew over the millennia, those innovations increased the efficiency of business, which freed up resources that could be redirected toward innovating further and faster than before.

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Over time, this increasing rate of change shortened the time between major innovations, so that the time-distance between the European age of exploration in the 16th century and the Industrial Revolution of the 19th centuries was significantly shorter than the time-distance between the first boat to cross the Mediterranean and the first boat to cross the Atlantic.

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Businesses are intimately tied to these accelerating changes and harness them to increase their commercial potential. While this might be simple enough to understand, with the information technology revolution, that acceleration in the cycle of innovation is approaching an extraordinary moment unlike anything commerce has ever seen before.

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How information technology is the core of all modern business

How Information Technology Has Revolutionized Business
Source: Tonymas/Wikimedia Commons

Every industry in the economy now has a software platform designed to take advantage of the galaxy of industry-relevant data that businesses have long had access to but no real way to utilize it.

With machine learning, customer behavior can be modeled based on individualized shopping histories to produce targeted incentives and advertisements to cater to those customers with a precision bordering on divination. Even farmers how apps and software services that keep them informed about weather conditions, soil conditions, and market information that is revolutionizing the way one of humanity’s oldest professions is done. The telecommunications revolution alone has enabled the kind of remote workplaces that have transformed the way people approach work-life balances.

Gone are the days of an entire floor dedicated to filing cabinets containing the analog, paper data points that a business had accumulated over several years or even decades. Now, software platforms in the cloud can keep track of everything digitally, making that entire floor’s worth of business data accessible in its entirety to powerful algorithms that a business can use to find new ways to make money or save on costs.

And with artificial intelligence on the horizon, businesses are turning more of their operations over to computer systems that can do the work efficiently and safely than the human workers they replace. This goes beyond the conversations surrounding automation in manufacturing over the last several decades, these new systems are set to replace the thinking worker, rather than the manual laborer. No sector of the economy will be untouched, in the end—not even the information technology sector itself.

Information technology challenges that lay ahead for business

How Information Technology Has Revolutionized Business
Source: Lance Cpl. Jackeline M. Perez Rivera/US Marine Corp

In recent years, various malware infections, ransomware attacks, and other security breaches have highlighted the need for vigilance among businesses about their information security practices. This alone won’t be enough, however.

We have become incredibly dependent on our technology to live out our day to day lives. Navigation is something of a lost art nowadays as Google Maps can do all the work for you and, increasingly, we are putting a lot of faith in new technologies like blockchain and machine learning to accomplish what existing technology cannot. The question though is whether this is actually wise. These technologies are not perfect by any means, though we tend to treat them as such, and it isn’t clear at all that these systems actually outperform human thought on several crucial metrics.

Self-driving cars are essential to improving road safety for everyone but the challenge of computer vision—where camera inputs act as eyes for the AI driving the car—is a major hurdle to true full self-driving technology. Recent model year vehicles have introduced automated driver assistance systems that have proven effective at avoiding certain kinds of crashes or accidents, but the incredible complexity of movement and pathfinding on the road is sometimes difficult for us to process as humans—even though vision is one of the things our brains are especially good at relative to computers.

Still, we know what certain road signs are at a glance while if it is a sign that the vehicle’s driver assistance software had never seen, inferring its meaning may be impossible. This is critical data that the self-driving algorithms need to safely drive the vehicle and, without it, insufficient information can lead to bad decision making by the AI systems. When we integrate these systems into healthcare and other critical decision-making processes, our overreliance on information technology-dependent solutions can be especially risky or dangerous.

Given how information technology can lull us into a sense of complacency, the greatest challenge of all for businesses going forward is knowing when algorithm-based decision-making are appropriate and when humans are better equipped to handle the challenge at hand.

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