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_____________________[PRO] Cracking the productivity paradox

Cracking the productivity paradox
By Paul Abrahams
FT.com site; Apr 20, 2003


In the autumn of 2001, Bill Gates visited Detroit, capital of America's automotive industry. Microsoft's chairman and chief software architect spends about 20 per cent of his time with customers, and he wanted to hear what senior executives at the top US motor groups had to say about information technology.

Their comments were unexpectedly blunt. The executives berated Mr Gates for including instant messaging in Microsoft's soft ware. They felt that rather than enhancing productivity, the technology was actually detrimental, because employees were spending too much time sending messages to friends, rather than working.



When Mr Gates returned to Microsoft's headquarters in Redmond, Washington state, he was sufficiently concerned that he summoned Jeff Raikes. Mr Raikes, a Microsoft veteran, had just been appointed head of Microsoft's client division, its biggest business, which includes Office, the suite of programs that incorporates Word, Excel and PowerPoint. The two men discussed the issue and remained convinced the group's software, including Instant Messenger, improved productivity. Indeed, the company's stated goal is that its software should double information-worker productivity within the decade. But they realised that there was no accepted methodology to measure such improvements.

"Intuitively, we know that technology improves productivity," says Mr Raikes. "We can see and feel that it is having a positive impact. Take telephones. There is no study about their productivity - we take them for granted. Bill felt that we needed to have a more proactive role in how IT-related productivity was evaluated, and how best practices were shared."

Mr Raikes and his team considered the problem and decided on an innovative response. Rather than going it alone, or hiring strategic consultants to conduct research, they decided to reach out to other companies, including competitors, to help fund an academic foundation to study the issue objectively. "We kicked the problem around internally and decided it was certainly important for us, but this was something faced by the industry as a whole," continues Mr Raikes. "We could do this on our own, but the outcome would be much more powerful working with others. We had a shared agenda here."

The response from the groups they approached was hugely positive: many had already been trying to address the issue on an individual basis. "We'd been on the productivity bandwagon for some years. Productivity matters. Doing more with less is at the core of business success," explains Mohsen Moazami, vice-president of the internet business solutions group at Cisco Systems. Similarly, at Xerox, the copier company had been focused on worker productivity almost since the foundation of Xerox's Palo Alto Research Center in 1970, says Jim Firestone, president of the corporate operations group at the company.

Eventually, Microsoft and a number of other companies established a body called the Information Work Productivity Council. Founding members included hardware companies such as Cisco, Hewlett-Packard, Xerox and Intel; software concerns such as SAP; and services groups such as Accenture. International Business Machines, which has increasingly been bumping into Microsoft as a competitor, has been in discussions from early on and is expected to join shortly. The council has also been opened up to customers: BT Group, the UK telecommunications company, joined last week.

To oversee the research, the council selected the Sloan School of Management at the Massachusetts Institute of Technology. The school will this week announce the creation of a research body, the Center for Information Work Productivity at MIT. The remit of the centre, headed by Erik Brynjolfsson, a professor at MIT, is to conduct research on how to measure and improve the productivity of information work.

The creation of the council and the centre represents an important milestone for the IT industry. It is emblematic of the sector's realisation that it has failed to convince its customers that its products and services generate an adequate return on investment. "Historically, there has been a big challenge judging the impact of technology," says Mr Raikes. "As Robert Solow, the Nobel economics laureate, pointed out in 1987: 'You can see the computer age everywhere but in the productivity statistics.' It's been called the productivity paradox."

That productivity paradox did not matter so much during the 1990s when the industry was expanding at double digits. But in the past two years, the US IT industry has suffered an unprecedented contraction, and looks as though it could shrink again this year. There is a new urgency in the industry to address the problem and demonstrate to customers that IT is beneficial.

"What is the right level of investment? There has been an absence of data and an inability to quantify the return. That is something that every company in the council has been hearing," says Mr Raikes.

However, spending money on IT is no panacea, warns Prof Brynjolfsson. There is a correlation between IT spending and productivity growth, but the correlation is not that strong, he explains. "It's true that US productivity between the 1970s and mid-1990s grew at a surprisingly low rate of about 1 per cent a year, and that around 1995 - when IT spending began to speed up - productivity accelerated significantly to about 2 per cent," he says.

"But many companies invested heavily in IT and failed to generate returns. You also need to look at the complementary organisational changes and changes in work practices that accompany successful IT investment. There is no cook book. You can't just buy the technology and expect it to generate productivity benefits." This idea that technology only generates an appropriate return when accompanied by organisational change has recently been gaining ground. Anne Mulcahy, Xerox's chairman and chief executive, warned last month: "It's no secret that technology alone is not enough. Yet many continue to buy - and sell it - that way. Productivity is not embedded in software code. Business improvement does not come in a box. Technology requires changes in the way humans work, yet companies continue to inject technology without making the necessary changes. Why? It's easier to write a cheque than to re-think the way you work."

To capture these critical organisational changes, Prof Brynjolfsson and his team plan to make 20-25 field visits to assemble qualitative data that can be used to create a model to be tested through questionnaires sent to about 100 companies. Initial results should be ready in October. The intention is to assemble a library of best practices that will be publicly available. In addition, Prof Brynjolfsson hopes to create an effective methodology to capture IT-related productivity improvements. That is the first stage of a minimum three-year programme.

There is no doubting the excitement of the council's members. "If this succeeds we should be able to provide the data necessary for our customers to make the right decisions," says Mr Raikes at Microsoft.

"There are billions of dollars to be saved," says Mr Moazami at Cisco. "If you can integrate people, processes and applications, you can have huge yields in productivity."

"Our customers are saying to us: 'No new projects'," says Danny Garvey, vice-president of BT global services. "They are trying to absorb what they have. But this work at MIT will help them prioritise investments."

"Productivity is the most important economic statistic," concludes Prof Brynjolfsson. "It drives living standards and the prof itability of companies. I am quite optimistic that if IT is properly deployed, the current high growth rate for productivity can be sustained."

If MIT's conclusions on productivity prove compelling, it could prevent Mr Gates from being berated next time he visits Detroit. But they could do much more than that; they could lift the fortunes of the IT industry and even the global economy.


Technology requires changes in the way humans work, yet companies continue to inject technology without making the necessary changes масса ерунды и других аналогичных расхожих мифологем, но как кейс - очень хорош... много мысли нужно бы подумать.

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