Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 20, 1993 TAG: 9306180043
SECTION: BUSINESS PAGE: F-4 EDITION: METRO
SOURCE: BY LEE GOMES KNIGHT-RIDDER/TRIBUNE
DATELINE: LENGTH: Medium
Two studies, one a research paper by an MIT economist, the other an upcoming report from the National Research Council, are for the first time offering strong evidence that computers, more often than not, increase the productivity of the organizations buying them.
While not all students of the issue are convinced by these new inquiries, they raise important social questions, including the extent to which computer-aided corporate productivity gains are coming on the backs of workers laid off because of corporate restructurings.
And there's a big caveat in the MIT findings. The report's author says the major productivity gains from computers don't come automatically from the machines themselves, but instead from a series of top-down company shakeups that take advantage of the computers' strengths.
Still, the pair of findings may well mark the beginning of a shift in an ongoing academic debate about the real value of the tens of billions of dollars worth of computers that industry has purchased during the last decade.
Until now, that debate's most striking feature has been the surprising inability of economists looking at the nation's overall economic statistics to find any hard evidence for a proposition that's gospel in Silicon Valley: that computers do indeed help the organizations buying them.
At MIT's Sloane School of Management, economist Erik Brynjolfsson used extensive data from 380 Fortune 500 companies and found, he said, that "all else being equal, the more a firm spent on information systems, the more likely would it would be to have higher sales."
In fact, said Brynjolfsson, the return on investment for information technology was a whopping 50 percent, high in its own right and higher than any other kind of capital investment. For example, he said, companies that bought new computers to route their existing fleet of trucks tended to do better than companies that bought new trucks.
Brynjolfsson's research is considered significant, because while he used the same methodology as other economists, his data was newer, covering the period from 1987 to 1991. Brynjolfsson said the fact his study found what others hadn't suggests that businesses, after stumbling at first, may have finally figured out ways of getting something back from their computer equipment.
The report by a special panel of the prestigious National Research Council, the administrative arm of the National Academy of Science, has been in the works for nearly two years and is not due out until later this summer. Yet several people who have seen early drafts say it will provide a strong endorsement of computers and the role they can play in boosting productivity.
There is already some grumbling about the panel's work, though, because computer industry professionals are heavily represented on it and the group is said to have relied heavily on a select group of corporate computer "success stories" in making its findings.
Brynjolfsson's study, to be published later this year in the Proceedings of the International Conference on Information Systems, was called "an important piece of work" by Gary Loveman, a Harvard Business School professor who was among the first in academia to study the issue.
But Loveman, a skeptic on the issue, said the study has a major weakness: Its data does not include most of the spending on desk-top computer systems, information Loveman conceded is nearly impossible to find but whose inclusion, he said, could have brought about different results.
That matter, though, may be taken up in upcoming studies of the computer-productivity link.
by CNB