The Benefits of Information Technology (It) for Productivity

Topics: Economics, Investment, Economy Pages: 5 (1615 words) Published: January 5, 2011
The benefits of information technology (IT) extend far beyond productivity as it is usually understood and measured. Not only can the application of IT provide better ratios of value created to effort expended in established processes for producing goods and delivering services, but it can also reframe and redirect the expenditure of human effort, generating unanticipated payoffs of exceptionally high value. Information technology can support inventive and creative practices in the arts, design, science, engineering, education, and business, and it can enable entirely new types of creative production. The scope of IT-enabled creative practices is suggested (but by no means exhausted) by a host of coinages that have recently entered common language—computer graphics, computer-aided design, computer music, computer games, digital photography, digital video, digital media, new media, hypertext, virtual environments, interaction design, and electronic publishing, to name just a few. The benefits of such practices have economic, social, political, and cultural components. IT-enabled creative practices have the potential to extend benefits broadly, not only to economic and cultural elites (where they are most immediately obvious), but also to the disadvantaged, and not only to the developed world but also to developing countries. And their impacts extend in two directions: Just as the engagement of IT helps shape the development of inventive and creative practices, so also can inventive and creative practices positively influence the development of IT. This report explores the complex, evolving intersections of IT with some important domains of creative practice—particularly in the arts and design—and recommends strategies for most effectively achieving the benefits of those intersections. The extent to which investment in information technology (IT) is related to organizational performance and productivity remains an open question in the minds of managers responsible for such investment decisions. Most past research into this relation has been based on cross-sectional analyses of 1-year periods. Attempts to determine relations between IT investment and the associated effect of that investment in such short periods have resulted in mostly mixed or negative findings. This study is thought to be the first to apply a multiyear, cross-sectional analysis. In the research, covering a 3-year period and involving firm-level data for a broad cross-section of U.S. industry, we found positive relations between higher levels of IT investment and selected measures representing organizational performance and productivity. These results, being based on multiyear analysis, are thought to be an important contribution in view of the fact that much of the existing literature in the area has failed to explain conclusively the economic impact of IT investment on organizational performance and productivity.

And it's true, if the proper qualifiers are added. You can't become more productive just by throwing more money into your IT budget, but the returns can be truly spectacular if you do your homework and apply it judiciously to your business. Until recently, there's been a serious lag in both the development and application of IT in Mexico. Much of the blame can be placed on the severity of the 1994-95 financial crisis, when credit for just about any reason, let alone high-risk software development, virtually dried up. Many businesses are only now starting to recover from that shock. Now, lots of businesses are entering the Computer Age. The Secretariat of the Economy reports that of the US$5.8 billion that companies invested in IT last year (about 1 percent of GDP), more than one-fifth--US$1.2 billion--came from small businesses. [ILLUSTRATION OMITTED]

For these newcomers, operating on a catch-up basis, the potential return on investment (ROI) from investing in the basics--computer hardware and software, and network services--is...
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