Information Technology and American Business - Information Technology Industry, The Impact Of Information Technology On American Businesses, E-commerce, It And Currency

The explosive growth of electronic and communications technologies since the 1980s was fueled in no small part by corporate America's desire to make money. Throughout the 1980s and 1990s, such high-tech companies as Microsoft and Intel strove to create affordable computers, Internet technologies, cell phones, and a variety of electronics-based products for use in the office and at home. A huge market segment, commonly referred to as the information technology (IT) industry, grew up around the production of these new technologies. From 1996 to 2001 alone the IT-producing industries' real domestic output increased 41% from $589 billion to $829 billion. (See Table 3.1.) The U.S. Department of Commerce reported in Digital Economy 2003 that the IT industries, which made up approximately 8% of the American economy in the late nineties, were responsible for about 30% of domestic growth over those years.

As information technologies spread through American offices and corporations, they transformed other industries outside of the IT sector as well. In the financial industries, such innovations as scanners and interconnected bank networks greatly reduced the number of paper checks in circulation daily. The retail industry discovered a new way to sell merchandise. Some $44 billion in retail sales took place over the Internet in 2002, as stated in E-Stats, a U.S. Census report on electronic commerce. The same report revealed that in 2002, $752 billion in business-to-business manufacturing shipments were ordered online.

The Internet did not affect all businesses positively. Travel agencies, for instance, saw an enormous drop in revenue due to online reservations sites. According to Travelers' Use of the Internet (Washington, DC: Travel Industry Association of America, September 2004), 44.6 million Americans had booked at least one travel service or product online during the previous year, and 40% of those travelers made all their travel reservations online. The growth in online bookings led to an 18.6% drop in the number of travel agency jobs in the United States between 1998 and 2003. According to figures published by the Bureau of Labor Statistics in Occupational Employment and Wage Estimates, 120,850 travel agents were employed in 1998 compared with 98,410 in 2003.

Information technologies, however, had their biggest impact on the productivity of American business as a whole. Every industry from trucking to real estate to health care to manufacturing incorporated new technologies that helped make doing business more efficient and affordable. Entire medical and law libraries were replaced by online databases that could be searched in minutes. Retail inventories, which used to be counted by hand, were linked directly to cash registers, ultimately cutting down on inventories and expensive storage costs. Bookkeeping and accounting, which was once an arduous task completed in thick, paper ledgers, was done in a fraction of the time and at a fraction of the cost on computer accounting programs.