Falling Cost and Growing Capacity of Information Systems

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The following paragraph is an excerpt from Porter and Millar’s article (1985, p. 154). “Because of the falling cost and growing capacity of the new technology, many industries seem to be moving toward a higher information content in both product and process. It should be emphasized that technology will continue to drop, and managers will continue to distribute the technology among even the lower levels of the company. The cost of developing software, now a key constraint, will fall as more packages become available that are easily tailored to customers’ circumstances. The applications of information technology that companies are using today are only a beginning.” Questions

Can you explain these two trends “falling cost” and “growing capacity” that are related to the development of information systems? Why is information so important to companies to the point that they include it into product and process? This article was written in 1985. Do you think that Porter and Millar’s vision of the future turned out to be true? Please illustrate your differentanswers with real-world examples. Page limitation: 3 pages, single-spaced, Times 12 (or Arial 10) Ans1. The cost of implementing IT solutions in companies is falling whereas the computing power and storage capacity of IT systems is growing each day. These two trends of “falling cost” and “growing capacity” are very basic to the nature of Information systems. A couple of reasons for it are:- The cost of storage, computer hardware and data transfer cost are decreasing everyday which in turn leads to cheaper hardware and software products. Also with the launch of more and more standardized products the IT solutions are reused as building block for further new solutions thus decreasing the cost significantly. Moreover, the more widespread use of IT solutions has reaped the benefits of economy of scales thus making the average cost of all...
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