The Portable MBA in Finance and Accounting, 3rd Edition

546 Making Key Strategic Decisions

industry that is information dependent. Very little real money is ever touched.
Rather, all transactions, from stock purchases to the direct deposit of workers’
checks, are processed electronically. Information technology has paved the way
for innovations like the NASDAQ trading system, in which, unlike the New York
Stock Exchange (NYSE), all of the trades are conducted totally electronically.

NETWORKS AND COMMUNICATIONS

It is becoming increasingly common in industry to create virtual wide area net-
works using multiple, interconnected local area networks. These networks also
connect the older mainframe and midrange computers that industry uses for its
older legacy systems to the client terminals on the users’ desks. Exhibit 16.5 is
a model of a typical company’s wide area network, and it demonstrates how all
of the older technology interconnects with the newer local area networks and
the Internet.
In the early 1990s, there were numerous, competing network operating
systems and protocols. While Novell and its NetWare software holds the largest
market share, Microsoft’s Windows NT is becoming the network operating sys-
tem of choice, and, because of the Internet’s over whelming success, TCP/IP is
rapidly becoming the standard communications protocol. Remember, though,
success is very fragile in the world of information technology. Today’s standard
can easily become yesterday’s news. If you are always prepared for change,
then you will not be surprised by it.

EXHIBIT 16.4 Information technology budgets by industry.

Financial services

Percentage of revenue

Health care

Aerospace/defense

Manufacturing

Chemicals

Retail

Telecommunications

Consumer goods

Utilities

Oil/energy

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0