InformationWeek

April 29, 1999

What Took Them So Long?

By Lou Bertin

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page-one headline in the April 14 edition of the New York Times read: "Computer Age Gains Respect of Economists." It could accurately have carried the subheadline: "What Took Them So Long?"

For those of us who have been following technology and its impact on businesses, and for those in the IT front lines, it has become axiomatic that technology--specifically, the strategic application of technology--is the sine qua non differentiator between successful, adaptive companies and their less-successful, techno-laggard competitors.

Yet the Times provided a jaw-dropping account of just how hidebound some of the nation's leading economists can be when forced to be adaptive themselves--in this case, amending their smokestack-economy measurement standards to a digital economy.

Even MIT's Robert M. Solow, a Nobel Prize-winning economist, can manage only grudging acknowledgment of the contributions technology investments have made to the past 10 years' worth of economic growth. Solow told the Times he "is far from certain" that technology investments have contributed significantly to the economic boom, this from a man whose most oft-quoted opinion is that "you can see the computer age everywhere but in the productivity statistics."

It's fair for Solow to suggest some of the investments companies made in the early 1980s were far from optimal, in terms of the differences the technologies made to their bottom lines. But the important thing is that those early '80s investments in business computing--crude networks, green-screen terminals, minicomputers and, for the ultra-daring, personal computers--helped set the stage for the customer-driven transformation that has followed.

Technology is the engine behind advances such as automated teller machines, cellular telephones, and the vast amount of information available online. It has helped companies improve their profit margins with customer- and partner-visible front-end technologies, as well as back-office systems that help wring every last nickel of productivity and profitability into the bottom-line bucket.

If Solow is wrestling with the question of how best to measure return on technology investment, he can get in line. Nobody has managed to come up with an airtight way of achieving that; wind, too, is difficult to describe, but everybody knows when it's blowing and can describe what has happened after the storm has blown through.

I'd guess most IT managers have at one time or another dealt with business-side skeptics who are hard to convince of the value of some technology investments. With the wind of technology-driven economic growth blowing as strongly as it is, one can only suspect that those folks are insulated from economic realities and their effects. Even if they don't want to feel the breeze, they might look out the window once in a while to see which way the wind is blowing.

Lou Bertin is managing editor of CMP Media's Business Forums Group and an industry consultant. He can be reached at BertinL@aol.com.