Mark McDonald

Productivity drives growth in the economy and in your market value.  The shift from a focus on cost cutting to raising productivity is among the three transitions CIOs reported in their responses to the 2010 CIO Survey.  Please see the highlighted links for more detail.

This post concentrates on how IT raises productivity, a question provided in the comments to

IT has a central role in raising productivity because it is a source of leverage for information, communications, collaboration and management.  In other words, IT resources are available and for the most part are not consumed or used up in the execution of business activities.  That means I can readily flow more activity over the same resource base and therefore drive more productivity.

Economists will tell you that there are many ways to measure productivity.  There is output per work hour, capital, invested capital, assets etc.  For our purposes we will just use a simple idea that it is output per resource.  That will allow us to play a little fast and loose with the examples so they can be clearer.

Here are ways in which enterprises can use IT resources and capabilities to improve productivity:

• IT can automate processes and activities shifting those activities from resource constrained people to less constrained and higher capacity systems.  Much of the internal automation of HR and other administrative processes are examples.
• IT can shift work from internal to external resources such as customers, suppliers and other interested parties.  Such a move raises productivity particularly when those external resources have the information and motivation to perform those tasks better than your people.
• IT can accelerate cycle time for internal processes by improving coordination and workflow.  Shorter cycle time means that more work units can flow across the teams
• IT can raise the quality and availability of external products and services as well as internal operations.  Here information combined with preventative maintenance and continuous improvement locks in gains.
• IT can expand trading/operational hours and access without requiring additional resources.  Online stores, customer help facilities and other services provided over IT are examples.
• IT can raise the value of products and services with minimal increase in the cost of providing those products and services.  Information is the key, particularly when applied to offer personalized or differentiated service.

These are some overall ways in which IT can raise productivity.

Please provide your own examples and thoughts, as I am sure this just touches the surface.

Given the range of options I would like to suggest focusing on one thing – Cycle time.  Reducing cycle time not only raises productivity by increasing throughput, but in doing so it raises the quality of the results (fewer errors) and the customer satisfaction (prompt & responsive)

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Category: 2010 Economy Leadership Strategy Technology     Tags: Business Management, Business Process, Economic Recovery, Economy, IT strategy, Strategy

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