IT Productivity Falls Short

By eweek  |  Posted 2001-11-05

A recent McKinsey global institute study reveals ITs dirty little secret, and an unrelated IBM Research paper helps explain the why of it. The revelation is that IT has been a laggard when it comes to raising U.S. productivity, which nearly doubled between 1995 and 2000.

The study is not so interesting for concluding that IT wasnt the primary driver of the productivity gains. Rather, the surprise is what were—improvements in basic operations, innovative business models and market bubbles.

Thats not to say IT didnt contribute. It did, especially in certain industrial sectors, such as retailing, where vertical applications yielded big returns at companies. But the 17 percent, year-to-year growth in spending in that period hardly seems to justify what the study suggests is often a lackluster return.

ITs contribution can be endlessly debated, but McKinseys conclusions are clear. It cites a 1987 quote from MIT Nobel laureate Robert Solow: "You can see the Computer Age everywhere but in the productivity statistics." Find the summary at

An IBM Research paper titled "Autonomic Computing" helps explain why IT has been disappointing on the productivity front. Today, computing systems are so complex that they consume a disproportionate amount of energy and dollars just to keep them going. The answer, IBM theorizes, lies in systems that behave like the human nervous system.

"Its time to design and build computing systems capable of running themselves, adjusting to various circumstances and preparing their resources to handle most efficiently the workloads put upon them," the paper says.

The idea is largely metaphorical and smacks of being an IBM marketing tool. At the same time, it suggests how IT might get out of the productivity cellar. Find it at

Im going to hold off saying much about the Microsoft-government deal until its sealed, save for a comment or two. First, I told a colleague early last week a settlement was imminent, not due to inside information, but because it added up: The government backed off on a breakup, the appeals court overturned much of the case and Microsoft knew it had to yield a bit because it could not wiggle out of the remaining charges.

Second, a jittery citizenry, preoccupied with terrorism and the war in Afghanistan, is tired of a case in which discernible benefits would be unlikely. The hardest part of this case has been figuring out how to constructively punish Microsoft. The states and European Union can carry on with the sideshow, but at the federal level, its time to move on.

Rocket Fuel