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The Relationship Between IT and Economic Performance

The Relationship Between IT and Economic Performance

HARIDHA P 116 27-Nov-2022

Process efficiency and the quality of both services and products

Today, information technology has boosted the efficiency of manufacturing processes. It has also resulted in a major reduction in manufacturing costs as a result of the reduction in the vast number of low skilled laborers. Because of the reduced production costs, this has increased managers' ability to make more profit.

Managers have been able to manufacture high-quality items due to increased production efficiency. These products frequently match the needs of customers or are deemed to be more valuable than similar products on the market. This provides a firm with a competitive advantage over other similar firms, and managers should be among the first to embrace information technology.

IT in relation to communication and global transactions

IT has also enhanced communication among management, employees, customers, diverse organizations, and other stakeholders. Emails and other electronic methods of communicating have increased the level of collaboration among corporate players. The existence of e-commerce has enabled managers to conduct global corporate transactions. This has increased profitability for the company and improved managerial performance.

Organizational data is stored in a database system

The availability of a database system has aided management in maintaining all data connected to business operations. As they generate trends, this data will serve as a standard for projecting future performance.

Depending on the type of business, the historical data is organized monthly, quarterly, semiannually, or annually. This arrangement will assist a manager in developing a performance analysis using tools such as line graphs and other forms of measurements. This will provide a thorough understanding of how the company has performed in the past. The manager will be able to forecast the firm's near-term performance as a result of this.

Integration of IT in an Organizational Structure

However, in order for a firm to reap the benefits of its IT investment, management must guarantee that IT is properly and efficiently aligned with the firm's business plan, human resource management strategy, and resource allocation. A combination of these factors demonstrates effective management practice, allowing the company to benefit from IT.

Prior to investing in IT, firms should always reorganize or reengineer their processes to ensure a match between IT tools and the organization's subcomponents. This not only enhances the efficiency of production processes, but also their efficacy, which in turn improves the quality of products and services because the firm is leveraging its IT capital appropriately.


A passionate writer, blogger, language trainer, co-author of the book 'Irenic' and an enthusiastic learner. Interest includes travelling places and exploring.

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