6 Stages of Evolution of Information Tech­nology in a Business Enterprise (2024)

Some of the stages those are involved in the evolution of information technology in a business enterprise are as follows:

For minimizing the risks associated with the information system planning, it is necessary to recognize that every new technology needs to be absorbed in the enterprise before it can offer its fruits to the users. The simple transplantation of new information tech­nology is no solution to the problems of the enterprise.

It may even aggravate the problems in an organization. The process of absorp­tion of information technology is evolutionary and not revolution­ary.

Nolan identifies six stages of evolution of information tech­nology in a business enterprise. The stages are:

(a) Initiation

(b) Expansion

(c) Control

(d) Integration

(e) Data administration

(f) Maturity

1. Initiation:

This is the first stage of evolution of information technology in an enterprise. During this stage, an enterprise acquires a few computer systems and application software packages. A select enthusiast in the enterprise familiarize themselves with the com­puter systems and whatever software is available.

There is a high degree of decentralisation as IT professionals are busy developing new and basic applications. Since most of the modern enterprises of medium to large size are already using computer systems, this stage is a history for them as they have already passed through that stage.

2. Expansion:

The second stage is that of expansion. During this stage, the information systems have found acceptability and every depart­ment is in the process of acquiring more information technology (IT) resources, as they are quite satisfied with the benefits from the already installed IT applications. There is a rapid and unplanned expansion of IT applications without any serious long-term plan­ning for this purpose. Only a few of the applications are in areas that can offer substantial, tangible and intangible, benefits.

As the demand from the IT infrastructure increases, it is not equipped to cope up with. As a result, by the end of this stage, there is a growing dissatisfaction among the users and senior managers as they have now started feeling that information systems have not been able to deliver what was expected of them.

There are delays in the develop­ment projects and there are bottlenecks to be removed in the al­ready completed projects. The senior managers who thought they were doing great job by sanctioning large investments in IT find that the investment on IT is not giving a reasonable rate of return. Information System planning is still at a primitive stage and lack integration of various business functions. Many of the companies in India seem to have just passed through this stage.

3. Control:

Realising that the things are going out of control and per­formance of IT infrastructure is not upto the mark, a system of control is established. Earlier plans are reviewed and top manage­ment shows greater interest in the information system plans.

The orientation of development project is now focused on managerial activities than the operational activities. The top management’s involvement also results in accountability of the user for benefits of IT infrastructure. Each user has to ensure that the use of IT infra­structure is justified in terms of contributions to the achievement of goals of the enterprise. By the end of the third stage, users be­come more mature and they start expecting from information systems flexibility and responsiveness to the changing needs.

4. Integration:

The fourth stage of IT evolution begins with redesign­ing of application to integrate the information systems. Databases are designed and developed and these databases offer online re­sponse to the users need. By the end of this stage users start real­ising the benefits of IT infrastructure in improving communication within the enterprise.

5. Data administration:

Development of databases for common use gives rise to the need for proper administration of information sys­tem. The information system architectures that were planned dur­ing the fourth stage are implemented. By the end of this stage, in­formation systems are fully integrated at the organisational level. By now, formal organisational structures with clearly defined du­ties and responsibilities for the information function are drawn up.

6. Maturity:

The last stage of evolution of information system is ma­turity. Information is treated as a corporate resource and the con­trol of the systems gets permeated into the hands of line managers who seamless flow of information to strengthen the decision gets making process. Information systems take up the role of an enabler and not just a facilitator.

Information technology has undergone tremendous changes since the Nolan’s Model of evolution of information systems was thought of How­ever; it finds its validity even today. Each organization implementing information systems has to pass through these stages.

How long each stage would last, will depend upon the learning speed of the enterprise. There are slow learners and fast learners among the business enter­prises, too. It is necessary for a manager to understand at what stage of evolution of information system is the enterprise passing through, to understand what he should expect in future. The understanding of these stages of evolution, thus, helps managers to be proactive.

Nolan points out that the investment curve during these six stages will take the shape of double’s’, i.e. the investment will rise sharply in the first two stage to stabilize by the end of third stage. New investments would be postponed. Again a new phase of rise in an­nual investment in IT infrastructure will begin in the fourth stage only to take a steady shape at the maturity stage.