IT and the Productivity Debate

Michael Vizard

During the good times, we used to be treated to former Federal Reserve Chairman Alan Greenspan standing before Congress and attributing more than 10 years of economic growth to investments in IT that steadily increased the nation's productivity.

The IT industry naturally ate that analysis up. It became gospel, even though there never seemed to be any hard data to back it up. But in the past year, we have seen hundreds of thousands of layoffs, and the amount of money being invested in IT has been cut sharply. And yet, the latest productivity numbers from the Department of Labor suggest that productivity rose 9.5 percent from July to September, compared year over year.

Perhaps companies are finally discovering all the overlooked benefits of their previous IT investments. But more likely, a lot more that goes into productivity and business innovation than just IT. That brings us to some of the productivity claims being made about collaboration and other software. There's a lot of interest in productivity-per-employee rates because of the downturn in the economy. Collaboration software can definitely help and there's <strong>plenty of room for improvement when it comes to optimizing the work force</strong>.

But business people don't think IT deserves a whole lot of credit when it comes to increasing productivity. To a degree, IT enables changes to workflow and business processes. But that's not quite the same as saying IT was the prime mover behind the general improvement in productivity, so therefore continuing to invest in IT is automatically justified. It's usually the business people, not the IT people, who came up with the new process.

When it comes right down to it, more than a few vendor CEOs need to be a little more circumspect about directly linking investments in IT with improvements in productivity, at least until somebody comes up with some real numbers that unequivocally make that case.

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