Information Technology -- A new opportunity

Information Technology has drastically changed the way in which we execute our daily professional duties. "But that's the case with everyone else!", you'd react. Yes, you are right but we cannot leave our Information Technology exposure to just using the computer and sending emails. Since we, as Chartered Accountants, are involved with the financial and other core business areas, we have to be well-versed with information technology and it's pros and cons. And why not? Our exposure to information technology can considerably expand the scope and nature of our services.

With the computerisation of records in each organisation, the manner of audits has changed a lot. Accounting softwares have eased out normal accounting procedures. Balancing the trial balance statements, which often became an accounting nightmare, is now generated automatically!

Information Technology has eased out certain tasks but has also increased the scope of an auditor's duties. In order to optimise his performance as an auditor, knowledge of information technology is very essential. The very fact that the ICAI has introduced the ISA course highlights this.

The globalised economy is changing the way business was traditionally done. The Internet has brought about new and innovative ways of doing business - that too at a much quicker pace. Emails, tele-conferencing, and such other methods enable easier and quicker business dealings amongst companies operating in distant countries.

From a business point of view, innovation and speed in execution are the two vital elements upon which a company's survival and prosperity depends. The Internet has turned the whole world into a one big village where information travels at the speed of light. Companies are changing the way in which they operate. The emergence of e-businesses is changing the way of doing business. Hence, there lies somewhere a promising opportunity for us in business consultancy. In addition to fulfilling the normal CA duties, it is also possible to advise how your clients can take advantage of Information Technology to sustain competition and also grow in the process.

E-commerce means business carried on through the 'E'lectronic media -- more commonly understood as the Internet. E-commerce allows business to be done on larger scale. It allows a company to cater to the specific needs of each customer. This is possible because a customer can now log on to the company website and choose the right combination of product-specifications. This is not generally possible in a traditional brick and mortar company where middlemen are involved. Hence, e-commerce can provide more value-added services to the customer.

The Internet Age is also eliminating the need for middlemen in the supply chain. Products are easily being bought online at the company website itself. The company then delivers the product directly to the customer. This reduces the cost of distribution because middlemen-commission need not be paid. In effect, the customer gets his customised product at a lower price and the company gets to interact with the customer directly.

Let's take an example here. A music company 'X' lists all the song titles available for sale at its website. Parts of the songs are also put up for the customer to listen and choose from. Customer 'A' visits the website and makes his choice of songs, books his order and pays online through his credit card. Company 'X' records the ordered songs into a CD and sends it to 'A' through courier. Here, no sales shop is maintained by company 'X' and hence reducing the overheads considerably. Hence, 'X' can fix a lower price for the customised CD. 'A' gets his choice of songs at his doorstep and that too at a lower price. Company cost is low and customer satisfaction is high. Such is the effect of the 'Internet Age'.

Certain points that could decide the appropriateness and extent of information technology exposure are as under:
 

• If your client's company has to provide after-sales services to its customers, the same can be done through the Internet. This provides a faster way to satisfy customers.
   
• Computerising at least certain aspects of the business can enhance the internal operations of a company. For example, company information can be stored centrally so that all the employees can easily access it. Such information, when required by more than one person at the same time, can be easily accessed and also avoid duplication.
   
• Companies can extend their businesses by contacting overseas clients through the Internet. E-commerce can also help attract more customers worldwide.
   
• Information Technology can make transaction processing very fast and also reduce manpower requirements. Hence, information technology can reduce transaction costs. Moreover, the possibility of a human error can be reduced drastically.
   
• Information Technology can help in better management of resources and inventory. It can also improve the productivity of manpower.
   
• The company website can store all the company information that a prospective clients would want to know. This can reduce time and resources spent answering repetitive and common questions to one and all.
   
• Outsourcing, the latest opportunity in our globally networked economy, has proved that the Internet has tremendous potential. Companies in distant countries like the US and UK send work through the Internet; Indian companies do the desired work in offices situated in India itself; and then send the completed work through the Internet. Often, clients don't even need to come face-to-face with the service provider.
   

The above points are only some of the ways in which Information Technology can influence businesses. However, with the good comes the bad. Yes, there are certain factors that should be taken care of whilst chalking out an IT-enabled business plan.

In e-commerce, there is no face-to-face contact between buyers and sellers. Hence, it becomes difficult to establish the authencity of a transaction. The identities of buyers and sellers may not be rightly established. This gives rise to the possibilities of frauds.

Though awareness about the Internet has increased tremendously in the home consumer segment, users are still reluctant to buy products and services online. The broadband revolution will soon be brought about in India and that's when Internet will take off to new heights.

Also, web-based systems need to be put in place for customers who would like to order a customised product online. The company must be in a position to specify exactly how much time it will take for the product to reach the customer. For this, detailed and updated records of inventory-levels need to be maintained. An ERP package is, therefore, a pre-requisite so as to provide up-to-date information at all times.

These shortcomings may adversely affect the fate of online businesses in the short-run. However, every rose has its thorns. But, a rose is still a rose. Likewise, considering the advantages of Information Technology, its shortcomings are negligible; and adequate precautions will soon make them non-existent.

Since time immemorial, we have adapted to the changes that innovations have brought about. Typewriters gave way to good handwriting skills and calculators gave way to manual accounting skills. Now, computers have replaced both typewriters and calculators. Likewise, the Internet has changed the way in which we work. Today, innovative ways have to be found out in order to excel in this competitive world. E-commerce seems to be today's buzzword. It is a new opportunity that we must cash in on. We, with our all-round knowledge of business operations, can surely provide valuable services to our clients. Opportunity is knocking at out door; it is for us to open the door.

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