Sometimes, you wonder whether you’re getting that much bang for your technologic buck. Techies are familiar with the problem. They know it as the infamous “productivity paradox.” American companies have spent nearly $1 trillion on fancy computer systems over the last decade–with almost no gain in productivity. Apostles of the Information Age have tried to explain away that awkward fact as a “metrics” problem. How can you accurately measure output, they ask, in an information-based economy? The bad news, most economists now agree, is that the productivity paradox is no statistical fluke. It’s real. The good news is that it’s beginning to go away, thanks largely to new thinking about how to use computers better. “The ’90s will take us down a far more promising path,” says Stephen Roach at Morgan Stanley, who has spent years pessimistically documenting the phenomenon. “The benefits of technology investment are finally kicking in.”
Numbers tell part of the story. During the 1980s, productivity in U.S. service industries grew an anemic 0.7 percent annually. In the ’90s, Morgan Stanley reports, that figure has doubled to 1.5 percent. What’s changed? The economy, for one. Airlines, banks, retailers, insurance and transportation companies long ago embraced computers and information technology as a way of streamlining their business. More recently, they’ve been able to use that technology to undertake a rigorous restructuring. That has made real gains in productivity possible, says Roach, and the trend will almost surely accelerate. The reason: we’re thinking about technology differently.
Not long ago, a company would plunk a PC on someone’s desktop and expect him to figure out how to use it. That approach was fine for spreadsheets and word processing, but it did little to improve the way people work together. Now that’s changing. PCs aren’t merely tools for the desktop anymore. We’re using them as systems. They’ve become communicators, LANed and WANed (into local- and wide-area networks, in techspeak) together so that data can be massaged and zapped around the office (or the world) with a few strokes on a keyboard.
The payback can be huge, according to Bill Kirwin of the Gartner Group in Stamford, Conn. One client, a Northeast electronics company, has created what he calls a control point within its PC network. There, engineers in San Jose, Calif., swap ideas with marketers in Cambridge, Mass. Not long ago, the groups didn’t even talk to each other. The result: products that once took 12 months to develop now come to market in just eight. The insurance industry is another model. Thanks to computers, mostly desktops installed in the ’80s, Hartford’s insurers are now able to handle the same volume of claims with far fewer employees. Whole ranks of what Kirwin calls whitecollar paper shufflers have been shed in the last year or two, reducing the work force at some companies by as much as 30 percent.
The new generation of portable computers is also spurring productivity. Farmers in the cornfields of Iowa are recording crop yields on Apple Computer’s pocket-size Newton “communicators.” Traveling salesmen use “Point of sale” palmtops to log orders on the fly. Sounds great, but beware. Buying PCs doesn’t necessarily make people more productive. Researchers have found that it can cost two or three times as much to maintain a network of PCs as to buy them, and that doesn’t take account of the Frustration Factor. Like when your computer crashes and you lose half the report due tomorrow. Or you install new software that makes your old programs go on the fritz. “These are more than frustrations,” says Richard Finkelstein of Performance Computing in Chicago. “They affect our productivity.”
To be sure, these problems will diminish in time. Every year, PCs are getting cheaper, easier to us and more reliable. New software is changing the we work. Bill Laberis, editor of Computerworld likens the PC revolution to the advent of electricity. Thomas Edison designed the first electric station in 1882. But it was another three or four decades before U.S. companies widely converted from steam—and showed the first big gains in productivity. Is it any surprise that there should be a similar lag with new information technology? Considering how radically personal computers have already altered our lives, it’s sobering to think that process has only just begun.
73% of workers think computers improve working conditions;
71% of those polled were eager to learn to use computers and other new technology;
45% say they personally use a computer almost every day.
33% use computers at home for word processing;
23% for household or financial planning;
14% for personal banking or bill paying
