Lesson 1: Introduction to IT in Business and Accountancy Mainframe Era (1960s – 1970s)

Large Computers – Mainframes were introduced for large-scale

Information Technology (IT) has transformed the way businesses and business data processing (e.g., payroll, inventory).
accounting professionals operate. From automating financial transactions to Batch Processing – Data was entered in batches and processed
enabling real-time decision-making, IT plays a critical role in improving overnight.
efficiency, accuracy, and competitiveness. Cost and Access – Extremely expensive; only big corporations and
government agencies could afford them.
Role of IT in Business
Automation of Processes Personal Computer Revolution (1980s)
Streamlines repetitive tasks such as payroll, inventory management, and Affordable Computers – The introduction of IBM PCs, Apple
customer transactions. computers, and DOS-based systems allowed small and medium
businesses to use IT.
Communication and Collaboration Early Business Software – Word processing, spreadsheets (Lotus 1-2-
Email, video conferencing, and collaborative platforms (e.g., Microsoft Teams, 3, Microsoft Excel), and database programs revolutionized office work.
Google Workspace) improve coordination across departments and locations. Networking Begins – Local Area Networks (LANs) allowed resource
sharing within offices.
Data Management and Analysis
Databases, analytics tools, and cloud storage enable businesses to store, Internet and Networking Era (1990s)
process, and analyze vast amounts of data. Email & Web – Email became a primary communication tool;
businesses created websites for marketing and e-commerce.
E-commerce and Digital Marketing ERP Systems – Enterprise Resource Planning integrated finance, HR,
IT supports online sales platforms, social media marketing, and customer and operations.
relationship management systems. Globalization – IT enabled global supply chains and international trade
efficiency.
Decision Support Systems
Business intelligence tools help managers make informed, data-driven Mobile and Cloud Computing Era (2000s – 2010s)
decisions. Smartphones & Tablets – Enabled mobile business operations and
instant communication.
Role of IT in Accountancy Cloud Services – Platforms like Google Workspace, Salesforce, and
Accounting Software QuickBooks Online reduced the need for on-site servers.
Tools like QuickBooks, Xero, and SAP automate bookkeeping, financial E-Commerce Growth – Amazon, Alibaba, and Shopify changed the
reporting, and tax computations. retail landscape.

Cloud-Based Accounting Digital Transformation & AI Era (2020s – Present)

Allows accountants to access financial data anytime, anywhere, ensuring Artificial Intelligence (AI) – Used in chatbots, fraud detection,
timely reporting. predictive analytics, and automated accounting.
Big Data & Analytics – Businesses use large-scale data for strategic
Data Accuracy and Security decision-making.
IT reduces human error and secures sensitive financial records through Blockchain – Enables secure, transparent transactions (e.g.,
encryption and authentication. cryptocurrency, smart contracts).
Remote Work Technology – Collaboration tools like Zoom, Microsoft
Compliance and Auditing Teams, and Slack reshaped the workplace after COVID-19.
Automated systems help meet government regulations and provide clear
audit trails.
Key Impacts on Business Real-Time FInancial Monitoring
Increased Efficiency – Faster transactions and real-time data access. Dashboards and analytics allow immediate insights into a company’s financial
Global Reach – Companies can operate across borders with ease. health.
Improved Accuracy – Reduced human error in business and
accounting processes. Benefits
Better Decision-Making – Data-driven strategies improve Speed & Efficiency – Tasks that took hours can be completed in
competitiveness. minutes.
Cost Savings – Reduces paper use, manual labor, and operational
Types of Information Systems in Business errors.
Improved Accuracy – Automated calculations reduce human mistakes.
Transaction Processing Systems (TPS) Better Decision-Making – Real-time data empowers strategic planning.
Purpose: Handle day-to-day business transactions. Competitive Advantage – Technology-driven businesses adapt faster to
Functions: market changes.
Collect and store data about routine transactions.
Process sales, payments, orders, and payroll. Challenges
Examples: Cybersecurity Risks – Businesses must protect against hacking,
Point of Sale (POS) systems in retail. ATM banking systems.\ phishing, and data breaches.
Online booking systems in airlines. High Implementation Costs – Some IT systems require significant
Benefit: Improves speed and accuracy of routine operations investment.
Training Needs – Staff must be trained to use new systems effectively.
Management Information Systems System Downtime – Technical issues can disrupt operations.
Purpose: Summarize and report business performance based on TPS
data.
Functions:
Convert raw transaction data into meaningful reports.
Support middle managers in monitoring and controlling operations.
Examples:
Monthly sales reports.
Inventory summaries.
Performance dashboards.
Benefit: Improves efficiency in managerial decision-making.

Decision Support Systems (DDS)

Purpose: Assist in complex decision-making processes.
Functions:
Analyze large data sets and model “what-if” scenarios. History and Evolution of IT Business
Provide insights for strategic or non-routine decisions.
Examples: Early Stage (Before 1960s) – Pre-Digital Era
Market trend forecasting. Manual Processes – Businesses relied on paper ledgers, typewriters,
Risk analysis tools. and physical filing systems.
Investment analysis software. Basic Machines – Mechanical calculators and adding machines were
Benefit: Enhances quality of decisions with data-driven insights. used for accounting and payroll.
Limitations – Slow data processing, high risk of errors, and poor
accessibility to records.
Enterprise Systems
Purpose: Integrate core business processes into a unified system.
Types:
Enterprise Resource Planning (ERP): Integrates finance, HR,
manufacturing, supply chain, and sales.
Customer Relationship Management (CRM): Manages customer
interactions and sales pipeline.
Supply Chain Management (SCM): Optimizes supply and
distribution of goods.
Examples:
SAP, Oracle NetSuite, Microsoft Dynamics.
Benefit: Improves coordination, reduces redundancy, and supports
company-wide efficiency.

Knowledge Managemenr Systems (KMS)

Purpose: Capture, store, and share organizational knowledge.
Functions:
Maintain databases of policies, manuals, and best practices.
Support training and innovation.
Examples:
Company intranets.
Wikis and internal document repositories.
Benefit: Preserves institutional knowledge and improves learning.

Relationship Between the Systems

TPS provides raw data.
MIS summarizes the data for managers.
DSS uses the data for complex decisions.
Enterprise Systems integrate all processes.
KMS preserves and shares knowledge generated.

Note: Information systems in business are interconnected. TPS ensures

operational efficiency, MIS and DSS enhance decision-making, Enterprise
Systems integrate processes, and KMS ensures knowledge retention.
Together, they form the backbone of modern business operations.