Over the past decade, packaging and label maker CCL Industries Inc. has seen its productivity improve through the adoption of enterprise systems, the Internet, desktop applications, and collaborative tools. "Going forward, it's hard to say which business application of tomorrow can unleash similar productivity improvements," contemplates CIO Akhil Bhandari. " When you see something, you'll know it."

As productivity among nonfarm businesses soared in recent years, reaching an annual growth rate of 9% last fall, economists and business executives credited IT with the surge. But productivity growth has slowed--the Labor Department on Thursday reported that nonfarm productivity grew a relatively paltry 2.5% annual rate in the second quarter--and IT remains a factor in the lull.

Still, IT is expected to help companies continue to be more productive. There's no question about that. The debate centers on how IT will help. Some await the next killer app, while others see incremental exploitation of existing technologies or smaller new tools as contributing to productivity growth. University of California economics professor Hal Varian sees a growing number of small and midsize businesses that couldn't afford IT in the past adopting technology, driving up productivity rates. Regardless, a consensus among economists and business executives exists that productivity growth rates, spurred by IT investments, in the coming years will be higher than averaged through the last half of the 20th century; from 1951 through 2000, annual productivity rates exceeded 3% in only 12 years.

The lackluster productivity gains of the past few quarters reflect IT purchases made in 2001--or the lack thereof. Generally, a three- to five-year lag exists between the time companies make investments and when their benefits take hold. Three years ago, businesses scaled back on all types of investments as the a recession hit. Big productivity gains of the early 2000s can be credited to massive IT investments made in the late 1990s as companies deployed enterprise and Internet systems. These IT investments enhanced individual worker productivity, which resulted in a jobless recovery when the recession ended. Simply, technology let employers get the most out of each worker, delaying the need to hire new employees and lifting productivity rates. "But there's a limit to that; you can stretch employees only so far," says Creighton University economics professor Ernest Goss. "The low-hanging fruit is gone."

With an uptick in employment this past year, productivity growth rates began to fall. .In fact, Varian sees higher employment levels, not structural changes brought on by IT, as the main reason for slippage in business productivity growth in recent quarters.

MIT management professor Erik Brynjolfsson, for one, sees an eventual return to big productivity gains induced by IT once corporate executives begin to worry less about using technology to cut costs and explore how IT can bring new business opportunities. "Most companies haven't been in the mode of thinking of radical ways to change their business, to push the frontier, and invest in new ways of doing business," he says. "They need to focus on harvesting their IT investments."

CCL CIO Bhandari is looking for the right technology to boost productivity; with much of the focus in the past focused on enhancing internal operations, he's exploring solutions that will make it easier for the $1.2 billion manufacturer and its customers such as Proctor & Gamble and Gillette to design new products and business processes. "Any applications that addresses collaboration between companies will help improve productivity," he says.

At Hologic Inc., a medical imaging and testing products maker, the IT staff is evaluating ways to link its field-support staff wirelessly either through handheld devices of laptops. Either way, field engineers will be more productive, CIO David Rudzinsky says--and, better, quicker customer support through wireless technology should help grow revenue. "This can be revolutionary for their business with productivity gains far exceeding what they've seen already," he says.

Individually, new technologies such as wireless, RFID, and Web services may not have the same impact on productivity growth as ERP or the Internet did; but aggregating the efficiencies these new technologies offer could propel business productivity. Brynjolfsson believes too many people are focused on the next big thing; he says seemingly unlimited little things companies can do to exploit technology should result in significant productivity gains. His wife, a physician, wrote a program using a Palm Pilot to send notes to the next doctor to care for her patient. "There are a million and one examples of those little application to change the way we work that will have an accumulative impact on productivity," he says. "They'll have the same big impact as Wal-Mart does when it makes changes in its supply chain."