Its been a problem economists, IT companies and IT
professionals have puzzled over for years. We all know that
applying computer technology to business processes make them more
efficient, but how can it be proved?
To provide an answer, some of the world's leading IT suppliers have
joined forces with a group of US academics to prove that technology
investment can deliver real returns.
Backing the project is an A-list of global suppliers including
Microsoft, Accenture, BT, Cisco Systems, Hewlett-Packard, Intel,
SAP and Xerox, who have created the Information Work Productivity
Council, a research centre at the Massachusetts Institute of
Technology's Sloan School of Management.
With European corporate IT spending levels stagnant and spending in
the US falling in 2001 and 2002, the enterprise IT industry is
anxious to develop ways of justifying investment - something
businesses have been doubtful of since the dotcom crash and the Y2K
problem.
But in the UK the initiative provoked a sceptical reaction from
users and analysts. IT directors and chief financial officers have
never been less inclined to believe suppliers when they urge new
investment today on the promise of jam tomorrow.
However, despite the universal mantra of return on investment, IT
funds are still being spent as an act of faith while the business
case is being developed.
The £2.3bn investment in NHS IT, for example, is supposed to
revolutionise the provision of healthcare. Whether the new systems
are appropriate, are wanted by users or will be used by them,
remains to be seen.
Erik Brynjolfsson, professor of management at the MIT Sloan School,
who will head the new research centre, has for the past 15 years
championed the power of IT to improve business productivity. Now,
with funding from Microsoft et al, he aims to develop analytical
tools to prove it.
The Information Work Productivity Centre will examine business
processes and enabling technologies used by successful
organisations to create a standard method for measuring and
increasing information work productivity.
"In the industrial era, researchers and executives developed
scientific management principles to improve the productivity of
their factory workers. Today, success depends on developing new
practices to increase the productivity of information workers,"
Brynjolfsson said .
The key, he said, is IT-based business process re-engineering. "The
productivity benefits of IT spending are relatively modest compared
with those achieved when IT solutions are combined with innovative
changes in work organisation."
Danny Garvey, vice-president of BT Global Services agreed. "Despite
current technology innovations, most companies are not achieving
their highest potential. The centre will play a critical role in
providing insight into where disconnections exist between
technology and business processes," he said.
However, David Roberts, chief executive officer of Tif, the
Corporate IT Forum, said the new centre and its supplier sponsors
are "seriously missing the point".
"The real issue for users is the cost of software, not the
productivity of labour. IT departments are being told to get value
from what they already have before spending more," he said.
Richard Holway, director of analyst organisation OvumHolway, is
sceptical about what the centre might produce. "We are always
dubious of any research funded by interested parties to prove their
point," he said. The question of whether IT has produced any
productivity gains may be "unanswerable", he added.
"We actually suspect that most IT is implemented because it is
there."
Response from the IT profession
Senior IT professionals in the UK are sceptical about the value
of the Information Work Productivity Council and the findings it
might produce.
Paul Barnett, group IT manager of nationwide car dealership Reg
Vardy, said, "There is a long way between this initiative and the
real world."
Setting up organisations to tell IT departments about the
importance of IT spending and the need to constantly re-evaluate
business processes is like "teaching your grandmother to suck
eggs".
"We are very business focused already," said Barnett. "Any IT
manager worth their salt and backed by a progressive board can turn
IT into a business benefit."
Dominic Connor, head of IT at King & Shaxson, a firm of bond
brokers in the City of London, said, "What IT managers need is
tools that predict ROI, not documents that sound like a factory for
happy stories.
"They just send these documents to technical people, telling
them that spending money on computers is good." Elaine Clark,
group IT manager at the Chelsea Village complex, which houses
Chelsea Football Club, said she would take anything the centre said
"with a pinch of salt".
Businesses understand the need to spend on IT and technology can
deliver real returns. "You can't use a quill pen any more," she
said.
She also criticised suppliers such as Microsoft for bringing out
too many products and upgrades.
Rather than try and convince corporate users to spend more,
Clark said, "[Microsoft] should slow down a bit and make sure its
products are more stable before putting them on the market."
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Work council is addressing the wrong questions >>