Use of IT in Business

Recent development on information technology (IT) has had a tremendous impact in the field of business. Technology has inspired the re-engineering of traditional business processes to promote more efficient operations and to improve communications with in the entity and between the entity and its customers and suppliers.

These advances, however, have introduced new risks that required unique controls. They have engendered the need that for new techniques for evaluating controls and for gaining assurance on the corporate data and the information systems that produce it.

In the IT environment, this process involves gathering evidence relating to the reliability of computer controls as well as the contents of databases that have been processed by computer programs. Evidence is collected by performing tests of controls, which establish weather internal controls are functioning properly, and substantive tests, which determine whether accounting database fairly reflect the organization's transactions and account balances.

Basic Understanding of Information Technology:

IT is an integral component of business processes. Greater IT knowledge will likely increase the relevance and practicability of the findings and recommendations. Knowledge and understanding of IT can help the businessmen better assess the impact of any identified risks and findings. The businessmen and employees can communicate these in terms that are relevant and understandable to boards of directors, management, and others who may not processes a detailed understanding of technology and its potential impact on the business. The IT knowledge of the employers and employees will assist them in developing relevant and practical recommendation that add value to the business.

Business managers must be comfortable presenting technology related business risks and their potential impact to the board of directors, executive management and other stakeholders. Presenting technology issues in a context ensures that management is better informed and better able to understand the risks, issues, implication and impacts while making technology-related business decisions.

Board of directors need to understand the risks, mitigating initiatives being undertaken and any residual risks when dealing with core business processes. Further, when business strategy is being changed, such as outsourcing, developing major systems or changing technologies, manager will be better able to relate these in business, rather than technical, terms to the boards of directors and senior management.

Relevant Business Knowledge:

IT knowledge encompasses an understanding of the use of technology in providing services to business processes. It also includes knowledge of the business and industry related technological environment, the governing laws and regulations, and the policies and procedures designed to encourage and enforced compliance.

The manager should understand the inter-interactively among the three fundamental components of business knowledge as shown in the figure above: Information Technology, Industry and Business.

Business Use of Technology:

Enterprises adopt and use technology differently. The degree to which they use technology, the business processes supported or led by technology will impact the managers or entrepreneurs approach to an assignment and accordingly the knowledge and skills required.

Business uses technology in one or more of three ways: support enabler and business-centric. Technology used to support business processes is the basic level, and may involve typical financial and administration processes. At the enabler level, the business is using technology to extend business processes to achieve at the business-centric level. The use of technology is an integral and critical component of the entire business.

Terms	Description	Function
Support	IT is used to assist selective business process; however, that processes can easily and effectively be performed manually.	IT supports the business process.
Enabler	IT is used to enable the operation of business process that may be impractical without the use of technology.	IT enables the business to extend the business process.
Business Centric	IT is the business. The business model is conceived around an IT solution.	The business could not operate and would not function without IT.

 Stage in the Business use of technology

By using the above table as a means of classifying the business use of technology, the managers can determine the sophistication of the technology, environment and the knowledge and skills required to conduct an effective business operation.

Controls within the Computer Systems:

Just because the computer did the work does not mean its right. It means, manager cannot rely on information just because it is generated by a computer. We often assure "the information is correct because the computer product it". The computer does only as well as they were told to do and how to do by the programmers. Before concluding that the computer generated information is reliable, the manager must understand the computer-based controls and test those controls that have an impact in the business operation.