Is IT Still a Productivity Catalyst?

Productivity in the United States jumped at an annual rate of 4.3 percent last quarter, as businesses continued to produce goods and services with smaller payrolls. Could businesses have produced as much with fewer workers without solid IT systems in place?

In the 1980s and 1990s, economists debated the impact IT had on improved worker productivity, eventually leading to widespread acceptance that it did. But how about today? Does IT continue to help propel productivity or has its benefits been absorbed into the business process?

I posed that question to Creighton University economist Ernest Goss, who produces a monthly business conditions index for the nine state Mid-American region and the three state Mountain region. In an e-mail message, Goss wrote that some of the easiest targets for IT have been achieved but areas of significant productivity gains have yet to be tapped. He cites, for instance, education and training services that can be delivered more efficiently over the Web. "Does it really make sense for a professor to deliver a lecture before a classroom of 35 students when these same students could obtain a superior lecture from a Nobel prize winner on demand?" he asks. "This will mean lower costs and higher productivity."

Here's more of what he wrote:

The impact of IT, including Internet usage, on productivity is much like that of personal computers in the early 1980s. That is, there were significant missteps as businesses learned how to take advantage of this new technology. Likewise, there were significant costs associated with early business usage of Internet and browser technology. We continue to see excessive costs related to Internet usage by many businesses. For example, many businesses incur excessive costs in their early attempts to embrace a business plan that includes a significant website presence. This will mean that we will continue to see productivity gains related to Internet and browser technology as we advance along the learning curve as we once did with PC usage.

For example, newspapers such as The New York Times are suffering large losses due to their attempts to do businesses in the two worlds—print and Web—without really doing either that well. However, they will get it and thrive once their business plan is more clearly revised and linked to the latest technology and consumer expectations. In the interim, productivity in the print area will drag overall communications productivity down. Thus, I expect gains from it to remain significant as, for example, newspapers learn that no one is reading their stock quotes section. Is there really a demand for day-old stock quotes when anyone with Internet access can obtain a stock quote that is 20 minutes old?