Network Technology in Modern Business


In recent years, network technology becomes a populate approach that helps companies to solve problems of daily communication and increase productivity. Networks appear to be significant in knowledge capture, knowledge building, and knowledge dissemination. At a corporate worldwide network both captured underwriting transactions to update the corporate database and disseminated knowledge-based parameters, knowledge-based trends, and knowledge tools. Possibly the most common and pressing demand is access to the Internet and related communications net-works which transcend organizational boundaries.

Main body

Network technology consists of several platforms joined by the server. In this structure, knowledge-building is facilitated by the networked interchange of papers, hypotheses, data, gossip, and messages. And to draw on another case study company, This facilitates internal administrative efficiency but it also contributes to more creativeness through sharing of engineering problems and their solution, collaborative product development, and building of alliances with third parties. The workers component is the people challenge. At a large corporation the automating phase of their IT investment first of all displaced people. Those who remained, however, became core assets; their experience, their continuous knowledge acquisition, and their skills arguably made them more valuable to the organization than before (Olson, 2003). Some of the IT professionals were found to be peripheral (or surplus to requirements). The management would expect that those who remained would often be those with the skills to build the systems to support the judgment level of knowledge. Meanwhile, the underwriters remain core not only as of the selling and operations resource but as the analyzers, interpreters, and exploiters of knowledge and contributors of experience (Laudon and Laudon 2005).

At network technology, the configuration is concerned with shape, topology, and boundaries. Business network processes demonstrate this conceptualization of organization where processes transcend the historic boundaries of the firm as the activities of the value-chain are redistributed according to who does what best. Once we draw or chart the process in question–logistics and inventory management in the Baxter case–it becomes both irrelevant and difficult to think in terms of boundaries, especially in terms of asset ownership, job or role belonging, and activity location. The firm’s value chain has to be seen as a wider value system. Core processes are usually well known and can be modeled (Olson, 2003). In other words, structuredness is high. They also, by our definition, are central to business functioning and commonly affect external customers; we recognize them as primary value chain activities. Business network processes are their extension into trading partners. Here the understanding of need, the impact of extending this process, and the strategic outcome are somewhat uncertain–structuredness is lower. Support processes can be seen as relatively trivial to understand; structuredness is high, and by definition, they are secondary value chain activities. Management processes are secondary (or tertiary), but because they greatly involve the complexities of social behavior, are concerned with decision-making under uncertainty, and are more knowledge-based than task-based, their structuredness is low (Laudon and Laudon 2005).

If workers whose self-respect and perhaps power was based on what they knew about a process now have to give up that knowledge to a system, and thus to all, they are perhaps entitled to be rewarded in status, pay, and authority for their contribution. The same principle could be ‘extrapolated. An underwriter who progressed by his private knowledge is now contributing to, and working on, systematic knowledge (Olson, 2003). The company can see local area network technology as not only a democratizing force but as an equalizing force where technical and knowledge-based skills entitle you to join the meritocracy and sharing knowledge entitles you to stay. Expert systems and databases which codify or provide accepted knowledge are likely to be derivatives of public good and use, but not often firm-specific, value. Decision support tools which craft and make available workable knowledge are likely to be more private and thus competitively valuable. Transaction processing systems which capture potential knowledge and arrange it in databases are likely to be firm-specific and continuously provide a source of strategic value (Laudon and Laudon 2005).

This classification could be alternatively expressed as data, information, and knowledge. However, the earlier classification helps point out that ‘knowledge’ exists at each level and that is a strategic, competitive sense the direction of value is counter-intuitive. Data processing or transaction processing systems may contain potentially high knowledge value-in excess of either MIS and decision support systems or expert systems and knowledge-based systems. Also, transaction processing level systems may be the most expensive. Fortunately, the cost bind implied by this analysis is often mitigated by the fact that data processing yields joint benefits of an automation kind and information processing joint benefits of a decision-making kind. By the company under analysis, information can be seen as an alternative and more strategic option to ‘automating’, managers can note that often the IT infrastructure is common. The trick, therefore, is to recognize and pursue the knowledge opportunities in the firm’s (current and planned) information technology and information systems infrastructure. In some expert systems, projects prototypes were abandoned after an assessment of the maintenance needs for a full system. This problem was particularly acute as maintenance of an expert system and other prototyping tools often provided poor maintenance capabilities (Olson, 2003).

Responsibility for maintenance was a potential organizational difficulty while the need to re-key data from other manual or computer systems was another obstacle. Other organizational issues posed problems in some projects, for example, whether or not to give customers a copy of a marketing system or to keep it under the control of sales representatives and other internal staff (Laudon and Laudon 2005). Perhaps the most serious was the loss of a champion through moving jobs before a project had been implemented and gained acceptance. The structures and processes for evaluating information systems in many organizations assume that both costs and benefits should be certain–and that the benefits are obtained more or less automatically from the implementation of an IT system. As a result, cost-saving projects are likely to be ranked higher than those where benefits are less certain and therefore are seen as riskier. This research showed that projects designed to increase effectiveness and gain competitive advantage involved significant risk but also have the potential for major business benefit. Highly formalized controls will deter innovation at its early stages, though they are necessary for the successful implementation of large projects. Also, budget pressure on the information systems function often means reducing the ‘slack’ resource available for discretionary use in investigating potential opportunities.

the advantage of network technology is that it allows for the improvement and speed of all processes and communication within the organization. This leads to the capabilities required of the firm if knowledge is to be a basis of strategy. They are both technological and organizational. Knowledge systems comprising capture devices, databases, and decision tools are required (Olson, 2003). These are commonly built and used through communications networks local, corporate, and external. The users become knowledge workers. These become core personnel through their knowledge and IT-mediated work. Their skills have to be enhanced and more meritocratic structures rebuilt. Accordingly, at the organizational level collaboration in knowledge development and use is essential, continuous training in knowledge and knowledge skills has to be provided, and a knowledge-based ethos is required to lead, reward, and support the exploitation of knowledge as a strategy (Laudon and Laudon 2005).

So applications of IT may be crucial to reengineered processes. Some also may be valuable in the actual design stages. Modeling is the primary example–to portray processes, analyze information, material, work, decision, activity, and time flows, and test alternative designs and their impact. The use of these tools and techniques has not only brought in skills of information systems to teams. We are seeing the re-emergence of operations research, organization, methods, and industrial engineering, often within the IS function. Another contribution of the movement is that firms are re-learning that it pays to analyze the business first, before designing computer systems (Laudon and Laudon 2005).

The search for global efficiency implies that the organization must be able, within each relevant function, to co-ordinate and consolidate its activity to achieve available economies of scale. A key requirement would seem to be the collection of comparative performance information from locations around the world to support decisions on how effectively to allocate resources and source requirements. This need may be facilitated by building a global data network, collecting and providing access to information that conforms to some globally applied data standards. Organizations often wish to go further, to implement standard application systems worldwide, to ensure the integrity of information, facilitate the transfer of activities and people, and perhaps achieve scale economies in systems development and processing. Conceptually, however, the base requirement is for the definition and communication of standard data. Communication networks providing electronic mail, and computer and video conferencing facilities to support informal dialogue among professionals are the obvious IT contribution (Olson, 2003).

the main disadvantages of the new network technology are high costs and a need for training for all staff members. Finally, the potential IT contribution may be extended beyond the organization. Thus, the organization may extend its economies of scope through external alliances between companies with different skills and cultures. In the horizontal dimension, it allows the global ‘information partnerships’ between airlines, hotel chains, and car rental companies. In most respects, the culture stressed decentralization, with production sites, sales units, and service functions all operating as profit centers. Several tensions are built into such a structure, which can be pictured as a multi-dimensional matrix. The company can operate not as a formal matrix but through an overlay of a series of microstructured mechanisms on top of a distributed asset structure! Certainly, there was little evident co-ordinating bureaucracy: rather, an emphasis on a culture which expected agreement seeking, galvanized by a series of corporate strategic initiatives, and monitored by a small number of high-level executives such as the three responsible for international marketing. The strategy this ‘impossible organization’ was designed to deliver had the classic transnational components (Laudon and Laudon 2005).

The best explanation lies in the costs of exit from projects which are not meeting business objectives. Early formalization tends to freeze a project in a particular form and to make it more difficult for those involved to stop as this involves ‘public’ admission of failure. Also, real checkpoints tend to be months apart on large projects. In contrast, unapproved projects using discretionary resources have to gain continual approval from those involved. Such changing of approach was associated with project success. Underlying these problems of formalization is the nature of systems aimed at effectiveness through faster and better decision-making or aimed at gaining a competitive advantage. In these, it is difficult to define precisely in advance what will meet business needs, especially where the technology or the application–or both–are new to those in the business (Laudon and Laudon 2005). Early formalization tends to make it more difficult to change approach, for example, as a result of a better understanding of business needs or market opportunities. It also makes stopping a problematic project more difficult.

However, at later stages formalization becomes important as in project implementation at large–lack of formal approval and integration into the planning and operations of the business function concerned tends substantially to reduce the impact of the project on business results (Olson, 2003). Thus the problems and management requirements for successful IT projects differ during their development. Two broad phases can be distinguished: a development phase lasting from the initial idea generation to the development of an initial working system, and an implementation phase in which a system is implemented fully within the business. Between these, there is often a period of refocusing to clarify the business goals which can be achieved and the technology and organizational change which will realize these benefits. The system design develops through an iterative process of evaluation followed by a further prototype system. Particular gains come from enabling business managers and staff unfamiliar with information systems to see what can be done and thus to refine the specification of the functions of the desired system (Laudon and Laudon 2005).


In sum, a local area network will help the company to improve its communication and productivity. The management and technical requirements in the implementation phase differ from those in the development one. On the management side, the marketing of the project becomes critical in ensuring it will be used both internally and sometimes externally, especially for projects in the sales and marketing area. Technically, the requirements of the system change to include reliability and its delivery to users in a suitable form.


Laudon, K. C. & Laudon, J. P. 2005, Management Information Systems: Managing the Digital Firm, 9th Edition.

Olson, D. 2003, Information Systems Project Management. Web.

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