The Positive & Negative Effects of Technology in Business

  Reviewed by: Jayne Thompson, LLB, LLM
  Written by: Devra Gartenstein      Updated October 25, 2018
Desk in office
Making month end reporting a breeze with modern tech

Business systems have reached the point where it's difficult to imagine operating even a small company without basic technology such as desktop computers to receive email and keep records. For the most part, technological innovations speed up workflow and provide indispensable systems for organizing information. However, technology can also have negative effects on a business, making communication more impersonal and creating a false sense of knowledge.

Brings People Together, and Tears Them Apart

Technology is a double-edged sword when it comes to bringing people together. On the one hand, it makes it easier for co-workers to communicate and collaborate as they make use of email and team-chat sites such as Slack and Stride. Even basic technologies such as email and text messages speed up response time in emergencies and allow a more leisurely time frame for less urgent issues. However, social media platforms can be distracting, and they can't replace face-to-face interactions when it comes to the truly meaningful actions that build strong and resilient teams. In the Human Resources department, for example, technology can streamline benefit solutions and store and scan applications to efficiently screen prospects, but a computerized application process is rarely an adequate substitute for a face-to-face meeting to determine whether an applicant is a good fit for your company.

Organizes Information, But Needs Familiarity

Computers store and organize information in ways that would often take human beings considerably more time. It takes seconds to pull a profit and loss statement using QuickBooks, while it might take hours to compile the same report on paper by hand. The information systems you create using technology and software are only as good as the information you enter into them. There is no substitute for firsthand knowledge of how your business works when setting up a computerized application to track your operations. The person who enters the data must be deeply familiar with the nuances of your company's business model to generate truly meaningful information.

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Saves Money, and Costs Money

Technology saves money for your business by saving time, such as the hours that would be required to compile reports by hand. In addition, meaningful and up-to-date information helps you quickly recognize problems and opportunities and respond proactively. However, computers, software and the training required to maintain and upgrade them can be expensive. These expenditures may be more costly than the time you save.

Enhances Customer Data, But Raises Privacy Concerns

The enhanced access to information made possible by computer systems raises a range of privacy issues. By collecting data about customer needs and behavior, companies are able to effectively target advertising and promotions. Many consumers consider this kind of record keeping a violation of their privacy, and it raises a host of legal issues. Similarly, businesses can use technology to monitor employee behavior and performance but this type of surveillance can create a hostile work environment. In addition, businesses can fall victim to unscrupulous individuals who hack into their computer systems and steal valuable proprietary information.

Speeds Things Up, But Destroys Jobs

Manufacturing technologies can introduce efficiencies to a business by speeding up processes that you would otherwise have to complete manually. Assembly lines improve productivity by consolidating processes and moving more quickly than humans can. However, replacing humans with machines can introduce new problems, such as a bakery mixer that mixes quickly and thoroughly but can't make adjustments for idiosyncrasies in batches of flour or the amount of moisture in the air. Large-scale automation also creates social problems by putting people out of their jobs. New technology should be implemented in conjunction with retraining programs to prepare displaced employees for doing other types of work.

About the Author

Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.

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