All quoted material copyright 1997 by Scientific American
Summary and comments by Dr. Charles Ess / Philosophy and Religion / Drury University
Gibbs begins with a report from the March Association for Computing Machinery's meeting in Silicon Valley. While many predicted developments will be "cool" - Gibbs begins his critical turn by noting
But in the computer industry and in the media that cover it, it has become common to tout with almost millennial fervor that the changing face of computers will make them not just more enjoyable but also dramatically more useful. Historian (and Scientific American columnist) James Burke spoke for many at the conference when he asserted that "we stand today on the threshold of an explosion in information technology, the social and economic consequences of which will make everything that came before look like slow motion." (82)
In fact, the explosion is well under way, and its economic blessings so far appear decidedly mixed. For all the useful things computers do, they do not seem, on balance, to have made us much richer by enabling us to do more work, of increasing value, in less time. Compared with the big economic bangs delivered by water-, steam- and electricity-powered machines, productivity growth in the information age has been a mere whimper.
Anyone who has whiled away an afternoon upgrading a word processor, taken a break at work to download box scores from ESPN.com or watch in horror as a system crash obliterated several hours' work can attest to part of the problem. Recent studies of computer use in offices reveal that much of the time saved by automation is frittered away by software that is unnecessarily difficult, unpredictable and inefficient. Design experts warn that current industry trends toward increasingly complex programs and new, untested ways of presenting information could do more harm than good - and will almost certainly do less good than advertised. (82)
The ambivalence begins with the recognition of "the seemingly poor payoff from the industrial nations' 25-year bet on information technology (IT) as an engine of economic growth." (82)
The stakes continue to mount. Despite a doubling every 18 months in the processing power a dollar buys, corporations have been pouring more and more dollars into computers. In the U.S., Roach [Stephen S. Roach, chief economist at Morgan Stanley] reports, companies last year spent 43 percent of their capital budgets - $213 billion - on hardware alone. That is more than they invested in factories, vehicles or any other type of durable equipment. Adding in software, networks and the people needed for computer support and training brings the total IT bill for 1996 to about $500 billion in the U.S. and more than $1 trillion worldwide, according to Paul A. Strassmann, chairman of Method Software and a former chief information officer for Xerox and the Pentagon. Polls indicated that executives intend to spend even more next year. (82)
Despite this climbing investment, however
What puzzles economists is that productivity growth measured in the seven richest nations has instead fallen precipitously in the past 30 years, from an average of 4.5 percent a year during the 1960s to a rate of 1.5 percent in recent years. The slowdown has hit the biggest IT spenders - service-sector industries, especially in the U.S. - hardest. Most of the economic growth in the 1990s can be explained by increased employment, trade and productivion capacity. Computers' contributions, in contrast, nearly vanish in the noise. (82)
While IT investments have resulted in productivity gains in some industry sectors - notably, telecommunications, involving highly routine tasks which are relatively easy to automate - "In the larger occupations where most economic activity happens - sales, management, professional work - 'productivity gains have been limited and disappoint,' he [Tom Landauer, a former Bellcore cognitive scientist now at the University of Colorado] says." (82,84)
There are four different economic theories attempting to explain the discrepancy between investment and actual productivity increases. The first, we would say, questions the validity of the assessment instruments. In particular,
In education, finance and a few other IT-intensive industries, output is inherently hard to measure. Perhaps the payoff is real, just hard to quantify. (84)
A second explanation points to computers constituting a relatively limited percentage of capital stock (2-5%). But adding the costs of software, telecommunications, and related equipment - but not the further costs of support staff and maintenance - brings it up to ca. 12%, (so Daniel E. Sichel of the Federal Reserve Board).
Railroads energized the economy when they accounted, at their peak, for just 12 percent of capital stock, editor Pam Woodall pointed out in the Economist last September. Why not computers? (85)
A third possibility is time-lag. Electric motors did not significantly boost productivity until more than 40 years after Edison installed the first dynamo in 1881.
It wasn't until 1919 that half of American plants were wired for power. And it was later still before factories reorganized their production lines to exploit the new technology fully. By analogy, now that about half of American jobs involve some form of computer and companies are deploy IT more strategically, perhaps the big productivity gains are just beginning. (85)
Relevant studies vary widely. Erik Brynjolfsson's (of MIT) often quoted 1993 study calculated an average gross return of 81% on computer purchases - more than 13 times the return on other sorts of capital investment. But this study has been criticized for failing the acknowledge the costs of computers' rapid depreciation and other hidden costs. By contrast, in a similar study in 1996, "Sanjeev Dewan of the University of California at Irvine confirmed high gross payoffs but found little evidence that IT performs significantly better than other kinds of equipment it tends to displace." (86)
A fourth explanation: perhaps computers are still mediocre tools. (Along these lines, in a sidebar, Gibbs reviews the current and probably future states of 3-D virtual environments, autonomous software agents, speech recognition and understanding, the Web, and Videoconferencing - all making the point that it is doubtful that these technologies will significantly improve many kinds of work. See 84-85.)
Substantial evidence supports the unpleasant conclusion that much of the $1-trillion annual IT bet is poorly wagered. According to the Standish Group on Cape Cod, Mass., 31 percent of the computer systems that corporations build for their employees are either canceled or rejected as unfit for duty. When they are installed, Strassmann says, "computers often create pathologies and increased costs." Consider U.S. hospitals, he suggests in his new book, The Squandered Computer. In 1968 they employed 435,000 administrated staff and served 1.4 million patients at a time. Although the average daily patient population dropped to 853,000 by 1992, administrative employment actually rose to 1.2 million - in large part because information processing consumed an increasing amount of staff time.
Many industries that made strategic investments in technology to become more flexible and responsive to changing markets, Roach says, have in fact accomplished quite the reverse. "Here's the rub," he explains, "About 85 percent of these outlays over the years have gone into banks, securities firms, insurance companies, airlines, retail, and the like. It used to be that these companies' main assets were people." During recessions, they could lay off workers and remain competitive. "But now they have this massive infrastrure of installed IT" whose expenses are fixed, he points out, adding that in the next recession, "there could be an extraordinary crunch on their bottom line. So there is a real downside here to the information age." (86-87)
While computers may still lead to productivity gains, Gibbs argues, "...firms will need to pay closer attention to what IT actually costs and truly delivers." (87)
A typical desktop PC carries a price tag of about $3,000 in the U.S. - or about $1,000 a year over the average life span of an office machine. But research by the Gartner Group in Stamford, Conn., reveals that in corporate practice, the average annual bill is more like $13,000. Most corporate PCs are linked to a network and contain a few standard programs: that adds $1,730 a year. Because computers are often hard to use, companies have to provide about $3,510 worth of technical support for every user. Then there are the technicians needed to keep the network humming, who add $1,170 to the check.
The largest notch in Gartner's tally, however, is for the time that employees waste "futzing" with their computers rather than working on them. That costs employers another $5,590 per computer each year, the group estimates. Its guess may be low. SBT Accounting Systems in San Rafael, Calif., found in a 6,000-person survey that office workers futz with their machines an average of 5.1 hours - more than half a workday - each week. One fifth of that time was wasted waiting for programs to run or for help to arrive. Double-checking printouts for accuracy and format ran a close second. Lots of time goes into rearranging disk files. And then there are games; Microsoft Windows comes with four preinstalled. All told, SBT estimates, futzing costs American businesses on the order of $100 billion a year in lost productivity.
There may be little that companies can do to reduce hardware and futzing costs. Boeing removed Windows's solitaire game from all its machines, Landauer notes. Sun Microsystems reportedly banned its managers from using presentation software to create fancy slides for meetings.
Of course, businesses could lower their IT budgets considerably by holding on to their computers and software for more than three or four years. But few do. "My guess is that 80 to 90 percent of that $213 billion [U.S. investment] goes to replace obsolete IT each year," Roach says.
The software industry frustrates long-term investments by producing ever larger, slower programs that require ever larger, faster machines....
But when it comes to software, new is not necessarily improved. Behavioral studies have shown that "creeping featurism" is often counterproductive. (87)
An additional cost of ever more complex software is, not surprisingly, employee time:
Four years of surveys by Margaret Hurley, director of research for the Nolan Norton Institute in Melbourne, Australia, show that nontechnical employees take 4 to 10 percent of their time to help co-workers solve computer problems. That huge reservoir of hidden support, Hurley calculates, lofts the total annual cost for a PC from $13,000 to about $23,500. "The factor most closely linked to support costs," she says," was the extent to which the user interface matched the way users thought and worked." (88)
If there is a bright spot in all of this, it's the recognition that real gains come from custom-designed interfaces developed for specific tasks - e.g., trading on the New York Stock Exchange, and vehicle inspection and maintenance. But this recognition is coming only slowly:
...researchers presented at least 83 novel interfaces at the CHI '97 conference. Many do truly nifty things. One program takes dictation with 97 percent accuracy from radiologists. Another allows users to walk through virtual-reality supermarkets. A "HyperMirror" both reflects users' images and projects video of distant collaborators. A Web-surfing agent automatically races ahead on the Net and brings back pages that it calculates will interest its owner.
But only nine of those 83 projects compared workers' performance on real tasks using the new interface with their current way of doing things. Four offered no gains at all. Radiologists completed their reports faster without the computer. Video offered no improvement over audio for collaborative writing or design. Only three new interfaces - an interactive blueprint program, the combination of a keyboard joystick with a mouse for two-handed input, and a "wearable" computer - sped work significantly. (89)