Improved productivity is a given of marketing claims in technology. The marketers rarely make clear what the basis is for the claimed improvement. Saying you are three times as productive calculating taxes with a computer than with a pencil is a true claim – but not a relevant claim to someone investing in a new software application to replace the current application. To get a big productivity improvement, the process needs to change, comparable to moving from manual calculation to computers and software in the first instance.
A quick review of productivity growth shows real productivity gains in the 90s, but little gain since. How did IT contribute in these time frames?
Growth Contribution of Computer Software
Federal Reserve, Table 3
The 70s and 80s were known as the “Computer Productivity Paradox.” In the 80s, first time automation (such as MRP) was widely adopted via departmental systems. Green screen applications optimized data entry for rapid calculation. Online entry / correction replaced pure batch entry, edit, process, and report cycles. Departmental stovepipe systems required re-keying of data from other departments to function. Despite the exploding investment in IT, this remained a labor intensive process and a brake on productivity growth.
The 70s and 80s also were known for the rise of Japan, Inc. where the US hemorrhaged manufacturing jobs as uncompetitive with the quality and cost of the Japanese. Exemplified by Taiichi Ohno and the Kanban system, this represented a change in the way a manufacturing plant and supply chain were organized. The traditional approach could not compete. Thus business leaders in the US needed radical change to what they were doing.
“Only in the late 1990s, after a major investment technology boom, were there enough information technology inputs to have a substantial impact on growth and labor productivity at the aggregate level” – NY Fed
In the 90s, tight integration across functional areas (ERP) made it so information was only typed once on the friendlier graphical (GUI) screens. Productivity grew faster as information passed instantly from department to department without re-keying. In the second half of the 90s deployment and productivity accelerated further as the Y2K scramble to handle the rollover to year “00” led to every system being replaced or modified with the newer integrated ERP.
The 90s also featured a massive reorganization of US business whether “reengineering,” “just-in-time,” or “lean”… the way US firms were managed changed dramatically. The technology boom coincided with radical change to how business operated leading to a jump in productivity. As late 90s new Y2K compliant systems came into production implementing tight integration over lean supply chains. The productivity surge carried through to 2004.
“Productivity has been in a low growth regime since late 2004” NY Fed
Productivity stalled since. (The exception in 2009 is described as “cyclical and transitory in nature” by the Fed). Innovation continued – smart phones and tablets provide even friendlier browser and mobile interfaces. Investment has intensified, especially in the “cloud.” Why then a reprise of the Computer Productivity Paradox? The applications are still the same underneath, supporting the same business processes and work flows. Restoring productivity requires change beyond the cosmetic effects of mobile user interfaces or cloud data centers of the past decade.
Change since 2004 is faster for consumers than industry with consumers adopting new Internet of Things gadgets. The consumer world is a democratic ecosystem of interconnection with self-registration on one side and approval / acceptance on the other. For example a consumer searches the web and clicks on a product to purchase, send the contents of the shopping cart to the vendor. The vendor responds with an order complete with pricing, and asks for payment information. The consumer responds with a credit card or payment service. An email confirmation is sent. The result is a secure transaction where all connections are created in real time based on shared information.
This contrasts the tightly integrated world of SOAP protocols on the industrial internet. Under SOAP a requestor sends a command on a tight connection. Each connection must be engineered and tested for proper formatting and syntax prior to connection. This is a very different baseline from the consumer example above where Web Services technology enables the loose connection for exchanging information until the transaction is complete.
As the Internet of Things expands from consumer gadgets to industrial equipment, the assumption changes to one where all devices are connected (loosely). Automation requires connectivity for productivity to expand to the ecosystem and past the supply chain. Less rigid but broader connection suits this environment (too many things coming too quickly for tight integration – but the data must flow). Back office work changes dramatically – data entry and keying is replaced by data flow from the Internet of Things and end consumers alike. Software bots can handle the gathering and processing of this data. People handle the remainder: quality assurance of the data as it flows through the organization – correcting issues as alerted one at a time, analyzing and drilling into the data sets, then approving and communicating the results. The organization increases productivity by changing work from keying centric to managing centric.
Want a productivity boost? You need to change what you are doing and use technology which supports that change. Embrace the Internet of Things as a reason to change. Deploy modern IT which eliminates keying as the featured activity and embraces loose connectivity. Restructure by assuring the quality of the data flowing through your organization. The needed software can be found here: AppsInHD.