The rapid growth of such software development has proved its effectiveness and great influence on businesses’ success and profit increase. Specialized software like the Electronic Data Interchange (EDI) has changed the interaction between organisations and their suppliers. Now the suppliers are integrated completely in the organization’s manufacturing process.

The most important impact of Information Technology on organizational structure is the irrelevance of geographical locations and distances. This has lead to an increase in the number of people working from home. However this organizational structure has its own challenges in terms of supervision and the high motivation levels required of the workforce. The second type of organization uses Information Technology as a communication tool between a production facility and a delivery system. The production facility and the delivery system are typically partners; hence the organization does not have much control over their activities. The primary challenge for this type of organization is to maintain quality and delivery deadlines. The third type of organizational structure enabled by Information Technology is that of a conventional organization which has effectively integrated Information Technology into its structure. This type of organization is best characterized by Federal Express which has used Information Technology to streamline its delivery mechanisms for overnight deliveries. The fourth type of organizational structure uses informational technology to forge closer relationships with their suppliers and customers. This results in a vertically integrated organization.

Traditional organizational structures have withstood the test of time and are likely to retain their relevance. However it is imperative to understand the effect of Information Technology on organizational structure to understand the different organizational formats spawned by the information age.