Newer technologies are known to exhibit a greater influence on all aspects of life and global society. Due to newer technologies, major economies of the world are undergoing a rapid and fundamental transformation. The present society is transforming and is gradually becoming a knowledge society. But all this is dependent on newer technologies. In this knowledge society, knowledge and information are vital and they are the major factors of production. And herein in this knowledge society and economy information and knowledge, processes, and ideas are escalating its share of trade. In this information society, the information-rich enterprises are producing high technology goods and services and are transforming human effort, materials, and other resources into services and products that are satisfying the needs of its customers in a better way. The success of US, European and Japanese economies can be attributed to such a fact, wherein the investment in research and development is many times compared to other economies.
As explained by European commission SMEs or small and medium enterprises are those companies that have about 250 employees and their maximum annual turnover is 50 million euro. The significance of SMEs cannot be denied for both developed and developing economies.
Earlier studies on SMEs worldwide, has shown some remarkable trends. IT reveals that the SMEs are primarily poorly managed. The management functions of planning, organizing, directing and controlling are not properly done. Financial management is poorly done, decisions are delayed and they are not providing fringe and retirement benefits to their employees. Lack of proper commitment from managers primarily due to poor access to information and poor information processing can be traced as the major reason for the above-mentioned problems.
Information technology can help in getting away with these problems in major ways. The examples of IT tools developed in the form of customer relationship management, computerized information management, computer-aided design, computer-aided management, enterprise-wide resource planning and business intelligence can help the managers immensely in their managerial functions. These Information technology driven tools can be said to have a major impact on the facelift of the small and medium enterprises worldwide.
When the information delivery is done through technological means then all the various facets of office works can be automated and adequately taken care of. The study over the effect of IT in SMEs reveals that the use of IT can escalate the function of service delivery, sales of goods and services, and communications, thereby improving the functioning of the enterprises! Use of Information systems has been found to improve the efficiency and effectiveness of the SMEs. And they have become a major functional area in business administration. It has been found that in the case of SMEs that have shown improvement, the information systems are playing a major role in e-business operations, enterprise management and collaboration and its strategic success.