Information technology
and systems have revolutionized firms and industries, becoming the largest
component of capital investment in the U.S. and many industrialized societies.
Investment in information technology accounts for approximately 50 percent of
all capital invested in the United States.
Information systems are
transforming business and the visible results of this include the increased use
of cell phones and wireless telecommunications devices, a massive shift toward
online news and information, booming e-commerce and Internet advertising, and
new federal security and accounting laws that address issues raised by the
exponential growth of digital information.
The Internet has also
drastically reduced the costs of businesses operating on a global scale. These
changes have led to the emergence of the digital firm, most of the firm's
significant business relationships with customers, suppliers, and employees are
digitally enabled and mediated. Core business processes, or logically
related business tasks, are accomplished through digital networks.
Key corporate assets
(intellectual property, core competencies, and financial and human assets) are
managed through digital means. Business responses to changes in their
environment are enhanced through digital communications, allowing for time
shifting (business being conducted 24hrs x7day ) and space shifting
(business being conducted globally or beyond traditional geographic
boundaries).
Information systems are
essential for conducting day-to-day business in the U.S. and most other advanced
countries, as well as achieving strategic business objectives. Some firms, such
as Amazon and E*Trade, would be nonexistent without information systems.
Some service
industries, such as finance, insurance, and real estate industries, could not
operate without information systems. The ability of a firm to use IT is
becoming intertwined with the firm's ability to implement corporate strategy.
THE INTERDEPENDENCE
BETWEEN ORGANIZATIONS AND INFORMATION SYSTEMS.
There is a growing
interdependence between a firm’s information systems and its business
capabilities. Changes in strategy, rules, and business processes increasingly
require changes in hardware, software, databases, and telecommunications.
Often, what the organization would like to do depends on what its systems will
permit it to do.
Business firms invest
heavily in information systems to achieve six strategic business objectives:
Operational excellence:
Efficiency, productivity, and improved changes in business practices and
management behavior differentiates excellent companies from rubbish companies.
New products, services, and
business models: A business model describes how a
company produces, delivers, and sells a product or service to create wealth.
Information systems and technologies create opportunities for products,
services, and new ways to engage in business.
Customer and supplier intimacy:
Improved communication with and service to customers raises revenues, and
improved communication with suppliers lowers costs. 
Improved decision making:
Without accurate and timely information, business managers must make decisions
based on forecasts, best guesses, and luck, a process that results in over and
under-production of goods, raising costs, and the loss of customers.
Competitive advantage:
Implementing effective and efficient information systems can allow a company to
charge less for superior products, adding up to higher sales and profits than
their competitors e.g safaricom 
Survival:
Information systems can also be a necessity of doing business. A necessity may
be driven by industry-level changes, as in the implementation of ATMs in the
retail banking industry. A necessity may also be driven by governmental
regulations, such as federal or state statutes requiring a business to retain
data and report specific information.
