David Frederick's | iAIR BLOG

Consulting, Innovation, Strategy, Vision, Education, & Ideation

IT and Productivity.. is there such a thing?

An excellent and interesting study by Erik Brynjolfsson from MIT’s Center for Digital Business. In it, Erik makes the case that if companies learn to make strategic decisions based on rigorous data-driven experimentation and analytics, not only will they see larger profits but they could drive the next great boom in productivity—which is in turn key to national wealth and standard of living.

There are also some interesting and not uncommon results i.e. that it’s not simple to tease out the relationship between IT investment and labor productivity, or economic output per hour of labor worked. Erik points out that between 1973 and 1995, productivity grew by only 1.4 percent annually. But it jumped much more from 1996 to 2003, and economists recognized that IT investment had taken time to pay off. This point may have been a revelation to economists on a more “micro- long-term level”, but those in technology management, IT, and product development have been making that argument for years! Ever try to implement a major IT solution i.e. Peoplesoft, SAP PLM, etc? Yikes!

Regardless, there is some really great stuff and applicable data in Erik’s study. I highly recommended it. Check out the summary. You can view it here!

-DF

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Written by David Frederick

February 28, 2011 at 10:13 AM

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