Does IT really increase productivity?

Richard Holway, Director of Ovum Holway

It has been announced that the world’s biggest IT companies are to fund research to discover if IT really has produced any productivity gains. Apparently users are a bit unconvinced.

The Information Work Productivity Council has been set up by Accenture, BT, Cisco, HP, Intel, Microsoft, SAP and IBM. MIT’s Sloan School of Management is getting $4.5m to determine the views of 100 users and conduct 20-25 site interviews.

Paul Abraham’s article on this in the Financial Times (21 April 2003) started with a tale of Bill Gates visiting Detroit and being berated by motor company bosses for including instant messaging in Microsoft software. Far from increasing productivity, the feature was largely used by employees to send messages to their friends. Gates was determined to prove that IT did indeed increase productivity and hence the IWPC was set up.

Now this begs a number of questions. Firstly, we are always dubious of any research that is funded by interested parties to prove their point. Secondly, we suspect that the question is unanswerable.

Having just read an excellent book on the stupid and selfish lengths people will go to in order to climb Everest - Into Thin Air, by Jon Krakauer, we were reminded of the old Q & A: "Why climb it in the first place?"…."Because it is there."

We actually suspect that most IT is implemented "Because it is there."

In 1986 when we started what is now Ovum Holway, we produced all the stuff ourselves using an Apple Mac and sent it off to the printers. Company results came in on faxes which we then filed thus building an enormous repository. All our interviews were on the phone or face-to-face.

Now?

There are layers of IT and production between what is produced and what you read. This is because you not only want the printed versions (as always) but an internet version, an e-mail version and a pdf version too. All our research shows that having gone to all this trouble, our customers print out our research and put it in a file.

Company results now come by e-mail…..which we print out and file just as we have always done. After all this time, no one has invented a better repository for all the stuff from various sources that we need to have to hand. All our interviews are still on the phone or face-to-face.

We spend a huge amount more on IT but are we more productive? Is our research "better" as a result? Do our customers value our research more highly because of the IT used to deliver it to them? Indeed, is our own example hugely different to most other companies?

Of course, you wouldn’t buy our research if we didn’t provide it in the latest format. And we couldn’t interface with anybody without the internet or e-mail. So, just like Everest, we have to do it ‘cos it’s there.

But, of course, we are all so much better off than we were 10,20, 30 years ago. Surely that’s because of productivity gains brought about by IT?

But in my case, in your case, and in Bill Gate’s case too, it is the existence of the IT sector which made us better off. I suspect that most of the increases in the general standard of living are due to the existence of an IT industry - rather than completely as a result of the productivity gains it has created. You may indeed be able to produce something using a third of the resource required a few decades ago - then you find that the other two thirds are absorbed by IT!

Do you find that hard to swallow?

Well, Bill Gates reckons that "70% of America’s 136m non-farm workforce should be redefined as information workers" (Source - FT 21 April 2003). So my statistic is not a million miles adrift.

We will await the findings of IWPC with great interest. Whatever the findings, you can’t put the genie back in the bottle. IT is not only here now but will continue to innovate and move forward. And you and I will continue to adopt and use it.

Why?

"Because it’s there."

Related Ovum Research

Holway@Ovum – An Ovum Advisory service

Why BT Ignite is now BT Global Services – Ovum Comments (Archive)

Making a success of outsourcing – Advice for organisations considering outsourcing

Ovum Holway is a leading industry specialist in outsourcing issues. Its latest report, The Offshore Services Report 2003, is available to buy here. To speak to the author of the report, Phil Codling, email PSC@ovum.com

For further information on how Ovum Holway can help you with your Software and IT services questions please email mail@ovumholway.com or call us directly on +44 (0)1252 740 9001.