Why IT can't seem to deliver measurable productivity

Why IT can't seem to deliver measurable productivity

Summary: Perhaps IT can't deliver measurable productivity because the measurements are wrong

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TOPICS: CXO
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Are your investments in IT bearing measurable results? Or are the benefits more "feels-right" types of results? Perhaps IT can't deliver measurable productivity because the measurements are wrong.

Perhaps IT can't deliver measurable productivity because the measurements are wrong

Every time I've spoken to a CIO and IT manager over the past decade, one question I always ask is if he or she has been able to measure the results of programs, be it service oriented architecture, CRM, Web-to-host, what have you.  And, I have to admit, I rarely hear measurable numbers -- it's usually anecdotal evidence, such as speedier processing, or positive end-user or customer feedback.

Don't blame the CIOs, though -- it's just that the benefits of IT are inherently difficult to quantify at any high level. In this vein, Janne Korhonen just published an interesting piece over at ebizQ, explaining why it's so hard to measure the productivity impact of information technology.

Janne quotes MIT's Erik Brynjolfsson, who in 1993 published a landmark paper on why the productivity impacts of IT is so hard to measure: 1) measurement error due to use of conventional productivity-measurement approaches; 2) time lags in IT payoffs; 3) localized optimization; and 4) lack of explicit measures of the value of information.

We don't seem to have come too far in the 16 years since Brynjolfsson published that analysis -- at least in Janne's opinion. He delves into Brynjolfsson's four challenges in some detail. For example, he notes that when it comes to measurement errors -- caused by outmoded ideas about constitutes productivity -- he calls for "rigorous new means to measure IT productivity and output are needed to account for IT's role in innovation and new value creation, commensurable with IT-enabled efficiency." IT's contribution to "operational improvements, new capabilities, new products and new markets" -- long underestimated -- is a good place to start.

As discussed here at this blogsite, there are benefits and gains that are either tough to capture, or tough to tie directly back to a particular IT initiative. "Business agility" is a classic example -- how do you measure business agility?  This is the benefit touted for service oriented architecture -- how much agility is being delivered by an SOA initiative, versus other systems? The businesses at the forefront of SOA tend to be at the forefront of other advanced management practices as well.

Then there's the whole matter of oversell, companies pouring money into IT products and services that may be, on the whole, unnecessary or overkill. Or worse yet, end up as shelfware. You don't need to be a productivity expert to see the waste there. So you have the combined storm of hundred of thousands of dollars being spent on something for results that, if measured, will be measured against archaic productivity standards. Will cloud breath clarity into this confusion?  Probably not.

It should be noted that Brynjolfsson hasn't been entirely pessimistic on the ability of IT to deliver business success since that 1993 paper. More recently, he and MIT's Andrew McAfee published data that shows IT making a big difference at a macro level. They observed that industries that made the greatest investments in IT during the 1990s have become the most competitive. "On average," they said, "the whole U.S. economy has become more 'Schumpeterian' since the mid-1990s. [Joseph Schumpeter coined the term "creative destruction" in 1942] What's more, these changes have been greatest in the industries that buy the most software and computer hardware."

Again, it's more than pouring money into products. McAfee and Brynjolfsson state that even with a lot of IT, "both innovation and replication require a combination of leadership and insight from executives. Take innovation: Many companies use IT to capture huge amounts of data from their operations, but relatively few have been able to use this data creatively."

And it takes perceptive management to identify the technology solutions that will make a difference, and be able to effectively measure the impact of those solutions.  As Janne put it:

"Not all IT projects are productive. They may even be detrimental to the business, but misaligned incentive schemes and other structures sustain non-optimal IT decision-making with predominantly short-term planning horizon and focus on operational and cost efficiency. IT investments should be judged by their overall bottom line impact, including not only cost reductions and efficiency gains but also the indirect impact that IT has on increasing business effectiveness."

The bottom line is that there has never been an expectation that IT would be solely responsible for a company’s rise or fall. Adroit management, supported by the right IT tools, makes the difference. A company that smartly and innovatively leverages its IT in new and creative ways will move to the head of the pack. And, thanks to IT, you don’t need a workforce of thousands to do so. And we need to measure these changes in more holistic ways.

Topic: CXO

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30 comments
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  • Sounds like excuses to me.

    If it can't be shown on the bottom line, its useless.
    No_Ax_to_Grind
    • agreed. And also making 100 widgets is more productive than making one

      and sitting on the pc all day.

      Cellphones (_any_phones) should be banned also, when people are trying to work.
      The supervisor should take any tasking related calls, and amend the work schedule accordingly.

      These days we don't seem to know how to deliver productivity in the west.
      stevey_d
      • RE: Why IT can't seem to deliver measurable productivity

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  • IT really needs to be aligned with business needs.

    From what I have heard talking with several managers, IT needs to come out out the silo and focus on delivering business needs and services. From what I get from speaking with several IT/QA managers, they do not really understand customer service or delivering for the business needs (which is a failure). Further, many IT operations can be automated, thus lowing costs and decreasing delivery times (as per SLAs, etc.). If they can not do this, they (IT) are a cost center with limited or no value to the business.
    B.O.F.H.
    • B.O.F.H. Mark this day on your calendar.

      For once I agree with you completely.
      No_Ax_to_Grind
    • "...they do not really understand customer service..."

      I couldn't agree more.

      I have spent 45+ years in customer service businesses...25 with airlines..and been in IT for the past 10 years. One thing I have seen is that the overwhelming majority of people in IT...at ALL levels..have absolutely no clue about how to provide customer service. They may be technically proficient...but are brain-dead when it comes to dealing one-on-one with the customer/end user.
      IT_Guy_z
      • This is the reason

        This is the reason why they went to IT and not to sales or customer service in the first place :)

        Usually neither IT guys nor customers/end users are evil. They just live in different environments and think differently. What is lost sale to customer may be just another dropped connection to IT guy. Or simply saving files in the wrong places may be nothing to user but a major headache to IT guy.
        Both sides need training. IT guys need some knowledge about the user world and users have to know something about IT. If that is too difficult then maybe IT should hire "translators" who could communicate between two worlds.
        paul2011
        • 'Cross-Training' or Translators

          The entire 'cross-training' is such a quagmire and a waste of time.

          You cannot show someone some commands and say here you go now are you 'trained'.

          Until someone is held accountable for servers/databases and has to be held to the fire then forget it.

          This is the same warm fuzzy of 'team' concepts another failed management/hr fiasco.

          Like other fads, 'cross-training' was brought about because of the layoffs and people being shifted around by clueless Mega-Corp leaders & Managers.
          use_linux
        • "Cross trained IT people" == business analysts

          What you are describing is the role of a business analyst. They are the people who learn the business and work with key users to identify outcomes and requirements, then translate that into something a developer can implement.

          Requirements documents can be anything from very high level to very detailed and technical - it all depends on how technical the user are or how business-savvy the developers are.

          Of course this is a perfect opportunity for BAs and middle management to build empires and bureaucratic systems that make development times longer and longer.

          Developers respond with practices such as RAD and agile try to short-circuit the red tape by putting users and developers together to "just do it". You get a faster result, but it is usually undocumented and inflexible. The consequence is that eventually the only way to fix the system is to throw it out and start again.

          Perfection lies somewhere between the two approaches, but unfortunately it is often only realised that it was fleetingly achieved in hind sight. Time to swing the pendulum again...
          Fred Fredrickson
      • On Customer Service

        IT is service department in a company. Usually there are three areas like IT, HR, and Accounting. The customers for these areas are other departments in the company. Why do they need customer service skills. I've never talked to a customer. I'm so far back behind the scenes that I'm only noticed when thing aren't working. The better I do my job the less people notice me.
        voska1
      • how many times have i seen the it guy start to blame the "user"

        aka customer.
        It's almost a mantra. The first thing is wheezing and head-shaking "what have you been doing", "how can you be using so much space", etc etc.

        It's _NEVER_ their system, their choice of system, their preferred vendor, etc etc, alway the user.
        stevey_d
        • re: 'blame the user'

          Yes, I agree I have done the same thing.

          After the feathers are settled down,
          *most* of the time it results in a system
          change to fix the problem that resulted
          in the end user having the issue.

          Use_More_OIL_NOW
        • It usually is the user

          When 9 times out 10 a bit of user training fix the problem it's the user.

          For example a user is trying to send a 2 GB file as an attachment and can't figure out why the email system isn't working. So we showed him how to use FTP and problem solved. But no it was too slow. Turns out the problem was the user had a Power Point presentation with Tiffs in that were 600 MB each.
          voska1
    • From my experience

      That may be true of some IT managers and IT workers but that is rare these days. Go back 20 years ago and it was more prevalent.

      Today though I see IT really trying to understand the business needs where I work. The road blocks often come from those areas that don't want to deal with IT but want all IT has to offer. What I see where I work is that you have some areas that demand something and provide a solution. A solution that usually doesn't fit business need after you implement and during the process discover what they actually want and need, hindsight is 20/20 here. I see this clear as day because I have other departments that work well providing the problem and direction they want to go. We work with them to find the optimal solution and the success rate 100% and improves things greatly.

      I've seen this shift happen slowly. I think it took us first being open and receptive to the business needs. Then it took the departments to dedicate some time and employees to work with us on the project. Generally if I see project just come down with solution that says "just do it" there will be problems. This is getting more rare but still happens.
      voska1
  • RE: Why IT can't seem to deliver measurable productivity

    It's the difference between IT and Computer Services. When Telecom, Networking, Database and Computer Services joined together, all kinds of problems resulted. The Service model that had propelled the computer industry to prominence was wiped out by the bureaucrats in the Telcom head offices, you know, the suits. Telecom quickly took over Networking and Database, and the DotCom bubble retired out all the Computer Service people who were still holding on. After that, IT was after whatever was better for IT, not what was better for the business.

    This merger event was the turning point.
    tburzio
  • RE: Why IT can't seem to deliver measurable productivity

    Erik Brynjolfsson and Adam Saunders recently published "Wired for Innovation: How Information Technology Is Reshaping Technology", which reviews and updates much of his earlier work on the topic of measuring IT productivity. Read short review: http://www.iii-p.org/books/book-reviews.html#wired.

    Michael LoBue, CAE
    Executive Director, IIIP
    lobue
  • New model - front office, back office

    Years ago I came upon an idea on how to organize IT departments. basically you have "Front office" which faces the customer and is staffed with business analysts, IT management and project managers. The "Back office" is all techies (and don't interface with the customers except in the presence of a Front office person). This "matrix" allows for a hierarchy of techies with the CTO at the root - and the CTO reports to the CIO (which is at the root of the business side).

    This allows the CTO to move techies around to different tasks - providing the support the business managers need. It also allows for the "mythical" technical track for promotions - while allowing for "regular" promotions on the business side. I thought it would be worth a try . . .
    Roger Ramjet
  • What is "IT" ? IT is US!

    What is IT any more any way?

    What is IT in Amazon?

    IT no longer supports business; IT IS BUSINESS!

    Web is the storefront.

    Operations are driven by MAPICS.

    HR by Peoplesoft.

    Given that IT is now the backbone, not the hat, of business, of course it delivers.

    Having a staff of people doing innovative products on top of the backbone? Well, that's more like advertising or R&D. Given the huge successes of IT in business, a small amount of spending on innovation to realize potential gains of orders of magnitude is a pretty good bet.
    jabailo1
    • Disagree, yet agree

      I disagree, in that IT is and will always be a cost center. IT isn't "the business", even though "the business" may occur entirely on IT-homed infrastructure, and in fact may consist of products and services that don't exist outside of a computer (e.g. purchasing MP3s from Amazon). But I'll still argue that although Amazon cannot operate without IT, the business it is in (selling stuff) *is not* IT, IT merely enables the business. In the cases of Amazon, Google, and the like, the business end is the tail that appropriately wags the IT dog.

      Entirely agree with your comments re: innovation.
      tquinn@...
    • the plumber you've hired for $200 callout, $100 per hour

      sits down, gets his mobile and laptop out.
      How long is it going to take him to get your leak fixed?
      stevey_d