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1.2 Information Technology Is Your Business

A few years ago, analysts noted that information technology had shifted from the computer room into the boardroom. Thanks to the Internet, IT has now moved onto the desktop and into the briefcase of customers and business partners around the world. Most executives have come to agree that IT has become essential to the business community. Year 2000 preparations highlighted this fact. To the extent that this has occurred, it has forced businesses into a new paradigm. Organizations are in the business of IT.

Businesses now find that IT has become intertwined with their business infrastructures. If this seems improbable, consider how long an enterprise could thrive or even survive in the absence of critical information systems. Consider an airline's computer systems. These systems are the heart of tracking parts and maintenance schedules, customers, reservations, personnel assignments, destinations, and a number of other business-critical functions. Recent events at United Airlines exemplify this point.

The September 11, 2001, attack on the United States (and a sliding economy) prompted United to furlough almost 20,000 workers. According to Computerworld magazine, however, IT remained key to improving customer service and business responsiveness. Less than two months after the attacks, United launched a revamped reservations system with new functionality to handle automated rebookings and new flight schedules. This system helped alleviate reservation staff burdens and made flight transfers easier. A United executive said this was "a revenue-generating mechanism to make flying more convenient"1.

IT can provide critical revenue opportunities and cost savings during tough times. The above example is just one of many demonstrating how the airline industry is in the business of IT. It is not alone. Financial institutions, telecommunications firms, utilities, manufacturers, retailers, insurance companies, transportation companies, and a host of other industries rely heavily on IT.

Financial institutions have long understood that IT is at the forefront of their business. As these companies respond to market changes, the line between areas such as mutual funds, lending, mortgage, insurance, retail banking, and other categories has blurred. Financial institutions are reinventing themselves. For example, customers can bypass intermediaries and use the Web to obtain a loan or refinance an existing loan. IT has become both an enabling element and a driving force within this rapidly shifting industry as the Web creates new opportunities where none had existed before.

Visa, for example, is expanding its traditional card-based business to be able to process a much wider variety of payments. These include the payment of loans, business (versus consumer) purchases, smart cards, and many other payment types. This is known as infomoney, a concept in which financial, transaction, and personal data can be sent anywhere instantaneously. IT in this situation must create a vehicle for deploying a new and revolutionary business model.

Telecommunications firms need to find ways to save money while concurrently shifting from voice services to wireless networks, Web-related hosting and development, broadband networking, and other offerings. IT is at the forefront of this revolution. The telecommunications industry is in the business of IT as much as any industry. Time will tell how effectively it addresses legacy infrastructures as a key component of this transformation.

A utility company's IT organization must ensure that customers get enough electricity and gas by predicting and managing loads across service areas. IT also plays a major role in coordinating power generators, wholesalers, trading firms, and distributors during a period of deregulation. Energy trading firms are almost entirely dependent on real-time information systems to move vast volumes of energy among participants. The result is efficiency and cost savings for all participants.

Numerous other examples across a variety of industries demonstrate why IT has become central to an enterprise's success and survival. This includes retailers integrating online and store-based purchasing environments and manufacturing firms reinventing traditional functions such as supply chain management and distribution. Businesses across the board are relying on IT more and more, to the point where they are now in the business of IT.

Yet each of these industries is facing a major challenge in being mired down by legacy computing architectures that manage critical core functionality and data.

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