The Portable MBA in Finance and Accounting, 4th Edition

20

Information Technology and the Firm

Dawna Travis Dewire

 

 

 

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 ...