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The information technology (IT) and its related topics that are discussed in Chapter 19, Information
Technology and You, focus on the users—what technologies they use, what they need to understand
about those technologies, and what they should expect on the horizon. This chapter discusses the
firm‟s use of information technology. 1
Historical Perspective
To understand the present and future of information technology, it is important to understand its past.
In the 1960s and 1970s, most companies‟ information systems were enclosed in a so-called glass
house. If you entered a company that had its own computer, the computer and all its peripherals
(printers, tape drives, and disk drives) were located behind a glass wall with a security system that
allowed only those people with access rights to enter the facility. One computer performed all of a
company‟s data processing functions, and the transactions were processed one at a time. The computer
in this host-centric environment was initially used for accounting purposes—check processing, order
entry, accounts payable, accounts receivable, payroll, and the like. Some companies used an outside
company (service bureau) to do its processing. By the late 1970s and early 1980s, most companies had
brought their computing needs in-house and were running their own computer systems. Recognizing
the power and potential of information technology, companies directed the use of their technology
toward operations, marketing, and sales; and in the mid-1990s organizations started to create a new
executive position, chief information officer (CIO), to oversee this process.
In the late 1980s, advances in technology prompted many companies to gradually change from
host-centric computing to distributed computing. Instead of processing all of the information on one
large mainframe computer, companies used minicomputers to act as dedicated processors for
departments or specific applications. The minicomputers were, in many cases, networked together to
share data. Databases became distributed, with data residing in different locations, yet accessible to all
the machines in the network.
The personal computer had the greatest impact on the organization. It allowed true distributed
processing. Each worker had a computer on their desk that was capable of performing feats that, until
then, had been available only on the company‟s mainframe computer. This created both opportunities
and headaches for the company, which will be addressed in the section on controls. By the early
2000s, minicomputers weren‟t dedicated but worked together to process the needs of the entire
organization. The Internet allows customers and suppliers to communicate with the firm. Workers
expect to be able to work from any location. Information technology management has gone from
focusing on the processing needs of one machine and the applications running on that one machine to
focusing on distributed applications, distributed hardware, distributed data, an internal network,
worker productivity, security, and access 24/7.
To understand how information technology is used in a firm, this chapter is broken down into three
basic components: information systems, organizational productivity, and management of technology
resources. Technology is used to run the organization itself—the information systems that support the
operations of the firm. Productivity of the workers also needs to be considered—e-mail, internal
business process, portals, printing, and analytic tools, to name a few. The consumer buying experience
is often online. Vendors can interact with internal inventory data. A corporate Web site needs to be
maintained. The IT organization needs to support all aspects of technology‟s use within the