Bay City Blog

Archive for tag: Productivity


With all the incredible advances in speed and performance of computers over the past twenty years it is worth asking the question of how much time and effort is actually saved by the use of all this technology? Ideally it would be great  to have an  automatic, computer driven robot device that you could magically feed all your  work to in the morning, go out to play golf then have a long lunch and return in the afternoon to find everything completed.  

This kind of vision of a work saving automaton has been the driving force behind much of the technology developed in the information world since 1946 when the first electronic computer was developed. Although incredible advances have been made over this period, a big gap still remains between the dream and the reality.   

You would think that with all the claims made for time savings and efficiency that there would be some kind of money back guarantee if the new widget you have just purchased fails to live up to the manufacturers promise. A bit like the advertising for the latest fitness machine promising a full six pack and ten kilo weight loss in six weeks if you buy the fantastic new Fat Blaster gizmo from ACME and Co. The dream remains despite the difficulty in proving the claims, because it really depends on how much productive effort is put into actually using the new gizmo. Often it is easier to believe there is a quick fix rather than consider the computer (or fitness machine)  as tool that requires skill and effort to gain the most benefit. 

As a pragmatic business person you may say that provided the spending on the new piece of technology will actually saves us labour cost then it is a viable decision.  One question you may ask is that given we do spend money, what level of overall efficiency do we gain?   Well some very bright brains at the Australian Productivity Commission did look into this issue back in 2003. They reported on the rapid uptake of computers in business over the period 1993 to 2000 and looked into how much our productivity improved as a result of this increase in spending on IT. A copy of the paper can be found here http://www.pc.gov.au/research/conference-papers/eictci

In the period 1993 to 2000 computer use increased from 40% to 80% and internet use rose from 30 to 70% across Australian businesses. Today computer and internet use has grown to almost 100% and you would have a hard time finding a business that doesn't run without one. The Productivity commission concluded that all the investment in IT did have a measurable influence on productivity. 

How much you would ask?  Well, wait for it, the answer they arrived at, was two tenths of one per cent annual increase in productivity.   This figure looks completely underwhelming.  It seems like almost a waste of time to continue to spend on IT based on these numbers. To put this in context it is a relatively small proportion of the overall increase in productivity of 1.8% pa over the same period.  

The Productivity Commission did qualify these figures saying that their measurements take a very broad view and that in fact there may be other reasons why businesses continue to invest in IT. One reason is that IT enables overall changes in processes and procedures and assist with reorganisations and improve the management of the business.  In another qualification the Productivity Commission said that often the benefits of IT can take time to have an influence. The Commission also found that the finance and insurance sector benefited most from IT investment. This does make sense given that finance and insurance staff spend most of their day processing information and would be expected benefit the most from computer automation.

In my experience I have seen business benefit enormously from the introduction of new technology when they have also changed and improved the operations processes and invested in staff training and ongoing support. So it's not just about the equipment or the software but how effectively the systems are used. It's a bit like the ACME FAT Blaster machine - you need to use it to get the benefit

The main message is that if your business is implementing a new IT system then it must be tested, the processes in your organisation changed, the staff trained up and the IT company is ready to provide ongoing support. This means that the IT company must move beyond just selling and installing the equipment and software. They must also take some responsibility for making sure your business obtains the full benefit.

I would be interested in hearing your stories of computers either making a big improvement  to your business or not lived up to expectations.   Does the finding of the Productivity Commission seem true or are there hidden benefits in using computers?