The Impact of Information Technology on Business Models

Information technology changes the way customers and businesses interact.

Information technology is an umbrella term that covers the hardware used for instant communication -- computers, cellphones and tablets -- and the software programs that facilitate the technological communication -- operating systems, data storage and social networks. The information age is characterized by an influx of IT, which has become an integral part of modern business models. Companies adapt by adding technology and reorganizing business structures to include IT.

Types of Business Models

There are four basic types of business models: Brokers, Creators, Distributers and Landlords. There are four types of assets that the basic models deal with: Human, Financial, Physical or Intangible. When you mix a business model with an asset, you get the refined model type, also called the, "specialized variation." For example, a Human Creator business model would work for an artist, a grocery store would use a Physical Distributer model and a bank lender uses a Financial Broker business model.

IT Successes

Many organization have used IT to boost success, and some of the highest-performing companies in past decades have been technology-driven computer and software firms. Brokers use IT to reach out to customers, while Distributers sell in demand for IT products and use IT to make transactions. Creators have more options to advertise and self-distribute. Data collection and storage has made it easier for companies to record and store customer information. This has been particularly helpful for healthcare Distributers. Many companies have increased revenue through data collection because advertisers can easily used stored transaction information for market research.

IT Issues

IT's affect has not been completely positive. IT connects information storage banks, so unscrupulous people can access unprotected, sensitive information and use it for illegal or unethical purposes. This problem is especially severe for business models dealing with Human or Financial assets because personal and fiscal information is susceptible to attacks. Businesses such as banks and hospitals have had to switch over to IT systems to keep up with current practices, but these companies have also had to spend an inordinate amount of money to protect and secure their information databanks.

The Social Factor

Social networking is a kind of IT software that displays personal information and connects groups of friends or colleagues. Social networks have shifted friendly communication from private to public and combined with busses to convert advertising from a one-way to a two-way interaction. Social networking is an evolving IT, but it encourages business models to share and react in real-time (just like other network members) instead of through delayed communication.

References

• Harvard Business Review: How Social Networking Has Changed Business: Bill George 12/2010
• MIT Sloan School of Management: Do Some Business Models Perform Better than Others?: Peter Weill 2005
• The International Lawyer: Catalytic Impact of Information Technology on the New International Financial Architecture

Resources

• Walden University: How Has Technology Changed Business?