The Use of Information Technology in Business

Every business need revenue.  In order to establish revenue, businesses incur expenses.  The difference between revenue and expenses is what is called profit.  The concept is very simple, make money, pay your expenses and keep the difference.  Now, if by chance you pay out more than you made, you have what is called a loss.  Let not complicate this picture by talking about cash flow, earnings, interests, taxes, etc.  The fact is that you have to take in more then you pay out.

On the expense side of things, it all comes down to making the business operate at a given level every day so that the business can generate revenue.  Typical expenses include personnel.  you need people to sale your products, operate machinery, deliver services to the customer, manage the books, answer the phones, yada yada yada.  If we were to just establish super categories to describe all expenses; those categories would be Sales, General and Administrative otherwise known as SG&A and Operations.

An important part of expenses and often the most misunderstood is Information Technology or IT for short.  Businesses have beat their competitors and wowed their customers just by IT alone.  On the other side of the token, businesses, have shot themselves in the foot, missed opportunities to extend a higher level of service to their customers, partners, employees and stakeholders by not using IT correctly.  Other business have ignored IT or brushed it off as not necessary.  These businesses typically learn lessons the hard way and eventually wind up spending more on IT in the long run due to their ignorance.

My next few blogs will expound on the use/misuse of IT in Business.