The Relevance of Information Technology in Managing Small and Medium Scale Enterprises

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A PROPOSAL ON THE RELEVANCE OF INFORMATION TECHNOLOGY IN MANAGING SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA.

BY:
AMULUDUN OLUWABUSAYO R.
090201049

CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF STUDY
Globalization of the economy has led to the emergence of information technology, especially the growth of the Internet and other communication network. Growing diversity of business transactions and increased competition, companies are changing the way they communicate with new processes that sharpen business performance. The Internet is becoming the foundation for new business models, process and new ways of knowledge distribution (Laudon and Laudon, 2000). Information technology (IT), as defined by Information Technology Association of America (ITAA), in Anyasi and Imoize (2010), is the study, design, development, implementation, support or management of computer based information systems, particularly software applications and computer hardware. Basically, information technology deals with the use of electronic computers and computer software to convert, store, protect, process, transmit and securely retrieve information. Examples of information technology include; personal digital assistant, personal computers, telephones, televisions etc. (Brain and Stacey, 2001). Chiefly, IT is believed to be the main driver of the economy, ever since the industrial revolution. With the exception of IT, most technologies either provide minor changes to a broad spectrum of industry, or a significant change but limited to a specific industry. In the context of small and medium scale enterprises (SMEs), IT facilitates the expansion of new markets, where companies can compete or act as a supply chain partner in a network that has already been designed by international conglomerates. Small and Medium Scale Industries are sometimes interchangeably used to describe small business organization because there is no clear-cut definition that distinguishes a purely small scale enterprise from a medium scale enterprise. The Small and Medium Enterprises Equity Investment Scheme (SMEEIS), 2007 defined small and medium scale enterprise as any enterprise with a maximum asset base of N1.5 billion (excluding land and working capital), and with no lower or upper limit of staff. Okiki, 2009 stated that the Central Bank of Nigeria defined small and medium scale enterprises as an enterprise with a maximum asset base of N200million, without land and working capital, also the number of employees not less than 10 and not more than 300. Section 37b (2) of the Companies and Allied Matters Act of 1990 also define small enterprise as one with: a. An annual turnover of not more than 2million naira, b. Net asset value of not more than 1 million naira. SMEs occupy a place of pride in virtually every country or state, because of their significant roles it plays in the development and growth of various economies. SMEs have aptly been referred to as “the engine of growth” and “catalysts for socio-economic transformation of any country.” SMEs now use the Internet and networking technology to conduct more of their work electronically, reliable linking factories, offices and sales forces around the globe (Dave, 2000). This communication evolution is governed by applied infrastructures with converged services and integrated application (Lucas and Jack, 1994). The convergence of IT is an important trend influencing both current and future markets, industry and technology (James, 2004). Establishment such as the shops, banks and institution interviewed, are extending these networks to suppliers, customers and other groups outside the organization to enable them respond instantly to customer demands and market shifts. Undoubtedly, IT is bringing about changes in organization that make firms even more dependent than in the past when it depends solely on the knowledge, learning and decision making...
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