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Chapter one


1.1 Background of the Study

According to William Sawyar (2005), information technology (IT) “is a general term that describes any technology that helps to produce, manipulate, process, store, communicate, and/or disseminate information”.

Another study, Shelly et al. (2004), defines IT as hardware, software, databases, networks, and other associated components used to develop information systems. IT has grown in tandem with socioeconomic development in developing countries.

IT has quickly become the backbone of modern industrial society, contributing significantly to the advancement of both emerging and established countries (Vasudevan, 2003; Long and Long, 1999).

IT has grown swiftly throughout Pakistan’s industries as costs for hardware and software have decreased. In 1957, “Packages Limited” began the process of computerization in Pakistan, and it is regarded as the first corporation in Pakistan to use computers. However, in International Research Journal of Finance and Economics, Issue 39 (2010)

The Pakistani government was first hesitant to accept IT, but computers are now ubiquitous in both private and public organisations. Internet service in Pakistan began in 1995, along with the upgrade of telephone infrastructure.

Pakistan’s IT Ministry now monitors IT-related issues/matters (Kazmi, 2003; Rizvi, 2005). Many additional ministries, including the Electronic Government Directorate, Pakistan Computer Bureau, Pakistan Software Export Board, Pakistan Telecommunication Authority, and the Computer Society of Pakistan, collaborate with the IT Ministry to boost IT in the country (Ghauri, 2003, 2006a, 2006b).

The financial sector is the largest user and investment in information technology. It was among the first to use computerised data processing in its operations, including cheque handling, bookkeeping, credit analysis, and ATMs (Bender, 1986; Martini, 1999; Vasudevan, 2003).

The use of computers in the banking sector began in the early 1990s. Bank of America was the first to deploy computers in the banking business. The usage of Automated Teller Machines (ATMs), developed by Don Wetzel in 1973, was the commercial banks’ biggest achievement in online and real-time automation.

The first ATM was placed at Chemical Bank in New York (Shelly and Cashman, 2004). The banking sector in Pakistan is likewise growing quickly, with the establishment of both local and multinational banks (Mabmood 2006). Many local banks work in the private sector and have been in operation since 1992 (SBP Report, 2005).

It was 1965 when computers were first introduced in Pakistani banks. Since that year, the major commercial banks in the private sector, including Habib Bank, United Bank, and Muslim Commercial Bank, have begun to acquire computers to regulate their banking operations (Hussain, 2003; Akhtar 2006a, 2006b).

Many Pakistani banks have recently introduced automated banking systems such as Misys, Sibel, and Fidility (Kazmi 2004, 2005; Shaukat et al, 2009).

IT, like banking, is a foundational component of all manufacturing industries. IT delivers numerous manufacturing business advantages to various organisations seeking to become world-class manufacturers. In 1957, “Packages Ltd” was the first manufacturing company in Pakistan to introduce computers.

Following that, many more companies began utilising IT, and it is now widely used in all manufacturing organisations. The industrial sector has seen a growth in the usage of firm Resource Planning (ERP) software (an integrated IT software system comprising of various modules that share a central database, aimed to automate business processes across the firm (Thomas and Michael, 2001).

ERP software systems such as SAP, Oracle, etc. are commonly utilised in many manufacturing businesses (Rizvi, 2005; Shahid, 2005).

According to Wheelen and Hunger (2000), organisational performance is the cumulative outcome of organisational processes and activities. These are assessed based on the organization’s work and activities.

Organisational management is concerned with organisational performance, control, and customer value, all of which have an impact on the organization’s reputation. Organisational effectiveness, productivity/efficiency

and industry ranking are common work measurements (Wetherbe et al., 1999). Efficiency is defined as “minimum resource utilisation and maximum output,” whereas effectiveness is “how well the job is done” (Robbin and Coulter, 2003).

Many academics, like Parthasamthy and Sethi (1993), Dell and Elliot (1999), have explored the influence of IT on quantitative performance variables, such as company incomes and profits, and discovered a favourable impact.

Whereas Frankin (1997), Zed and Han (2002), and others have observed increases/decreases in many qualitative performance measures such as customer satisfaction, corporate image, employee job interest, stakeholder confidence, interoffice link, and so on, they have also discovered positive impacts.

This article evaluates organisational performance in terms of increases/decreases in quantitative performance metrics, mostly income, for Pakistani organisations working in the banking and manufacturing sectors after implementing more IT.

1.2 Statement of Problem

Information technology projects fail more frequently than projects in other industries. The high rate of unsuccessful or unfinished information technology projects has a negative influence on organisational performance, resulting in losses of more than $55 billion. In addition, there is a high rate of fraud in the system.

1.3 Study Purpose

The study’s goal is to assess how information technology affects organisational effectiveness.

2. To determine whether there is a change in output levels following the implementation of information technology practices.

3. Determine whether the use of information technology will increase organisational efficiency and productivity.

4. To explore the variables that impede successful planning of an organization’s service delivery and to determine whether the usage of IT has helped to increase organisational productivity.

1.4 Significance of the Study

The study is important for the growth and survival of business organisations; the research findings will assist business managers and corporations in understanding the relationship between information technology and organisational success.

This sheds light on how excellent infrastructure can improve decision making and all other aspects that affect an organization’s capacity and ability to implement its strategies and achieve performance.

The study’s findings will increase the horizons of future academics, researchers, business analysts, managers, consultants, and others who are undertaking research on comparable or related topics.

1.5 Scope and limitations of the study

Given the importance of information technology and organisational performance, as well as the energising interest and advances in this field, this research project will attempt to demonstrate a correlation between these two phenomena to the greatest extent possible.

However, there are limits such as finances, geographical coverage, time constraints, data gathering issues, and level of development.

1.6 Research Methodology

The methods employed will be percentages and questionnaires, which will be distributed and filled correctly, making them valuable for data analysis. Tables with simple percentage and frequency distributions will be utilised to analyse data collected, while the Chi-square test will be employed to evaluate hypotheses.

1.7 Research Questions.

This study will seek to provide answers to some important and relevant topics.

1. Does the use of information technology have any effect on the organization’s efficiency and performance output level?

2. How does an information technology-based application effect output levels?

3. How may organisational efficiency be increased via the use of information technology tools

4. Does good information technology planning improve the organization’s service delivery?

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