Why Information Systems Matter??

Why Information Systems Matter?

Let’s start by examining why information systems and information technology (IT) are so important. There are four reasons why IT will make a difference to you as a manager throughout your career.

CAPITAL MANAGEMENT

Information technology has become the largest component of capital investment for firms in the United States and many industrialized societies. In 2005, U.S. firms alone will spend nearly $1.8 trillion on IT and telecommunications equipment and software. Investment in information technology has doubled as a percentage of total business investment since 1980, and now accounts for more than one-third of all capital invested in the United States and more than 50 percent of invested capital in information-intensive industries, such as finance, insurance, and real estate.

          Figure 1-1 shows that between 1980 and 2003, private business investment in information technology (hardware, software, and telecommunications equipment) grew from 19 percent to more than 35 percent of all domestic private business investment. If one included expenditures for managerial and organizational change programs and business and consulting services that are required to use this technology effectively, total information technology expenditures would rise above 50 percent of total private business investment. 

FIGURE 1-1 Information technology capital investment Information technology capital investment, defined as hardware, software, and telecommunications equipment, expanded from 19 percent of all business investment to 35 percent during the period from 1980 to 2003. Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Tables 5.2 and 5.8, 2004.

 

          As managers, many of you will work for firms that are intensively using information systems and making large investments in information technology. You will certainly want to know how to invest this money wisely. If you make wise choices, your firm can outperform competitors. If you make poor choices, you will be wasting valuable capital. This book is dedicated to helping you make wise decisions about IT and information systems.