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Of all the chapters in this book, the two dealing with information technology will have the shortest
half-life. 1 Because of the constant flow of new technology, what is written about today will have
changed somewhat by tomorrow. This chapter presents a snapshot of how technology is used today
with particular focus on the finance and accounting functions. When you compare your experiences
with the contents of this chapter, some of the information will no longer be applicable. Change means
progress. Some companies will not have adapted; consequently, they will have lost opportunities and
threatened their own future.
Information technology ... information systems ... computing ... do they all mean the same thing?
Many people think so. Information systems use information technologies to deliver value to an
organization. Information systems capture data, process it and/or store it, and output it as required or
requested. Information technology is the technology used to build these information systems—a
computer is only one example of information technology.
Consider an automated-teller machine (ATM): The information system uses the account on the card
and the input password to verify the user; the withdrawal amount is compared to the account balance;
if the funds are available, the information system instructs the cash counter to dispense the cash; the
information system also instructs the card reader to return the card and instructs the printer to print the
receipt; the information system records the transaction and updates the account balance. The ATM has
a computer that is connected to the bank‟s network (which may redirect the transaction via a national
network). Programs (software) are executed to accept the account, the password, and the amount of
the withdrawal; to determine if the withdrawal request should be honored; to format and then print a
receipt; to format and display the screen; to store the transaction data and update the balance. Data is
stored and accessed on the account‟s bank‟s server computers. All this is done in a matter of
seconds—24/7. ATM machines became the rage in the 1990s; now people can get cash back at a
variety of retail locations, and can even pay bills online. This evolution of the banking industry has
been driven by the use of technology and consumers‟ willingness (ultimately) to embrace the new
technology.
This chapter focuses on the technologies that touch the users themselves. The next chapter,
Information Technology and the Firm, looks at how an organization needs to view and manage
information technology.
Introduction
Amazing as it may seem, the personal computer has only been around for about 30 years. Before
1980, the world of computing belonged to highly trained technical people who worked their wizardry
in hermetically sealed rooms. Today, children use personal computers in kindergarten to learn the
alphabet, grade school students use the Internet to research term papers, and on-the-go executives are
always in touch using their laptop computer, beeper, Web-enabled smart cell phone (such as
BlackBerry), and cellular personal digital assistant (PDA). But many people are not yet comfortable
with these technologies. The range of people‟s acceptance and knowledge of information technology
is wide, with the technical novice at one end and the techie at the other end of the continuum. Where
you fall in this range will dictate what you gain from this chapter. If you fall near the techie side, skim
this chapter for ideas that you might find interesting.