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From its inception, information technology has been changing the way business is done. IT is changing the basis of business from labor and manual skills to knowledge management. The jobs required by information technology, as well as the technology itself, are changing the social system of your organization.
Furthermore, information technology is key to a firm’s competitiveness — organizations that are unable to adapt to the rapid pace of technology change will not survive in the marketplace of the future.
Has IT Changed Your Workplace?
The workplace has changed significantly over the last half-century due to information technologies, mainly due to automation of existing processes. Accounting systems are a necessity, while lean and six sigma are driving improvement. What will be the cost of such change and what can be done to prepare for it?
The IT Future
Nobody can predict the future, but there is one major trend developing that will significantly affect the day-to-day operation of your business tomorrow: the shift from a mechanistic view to an information orientation. This change permeates any organization, changing the responsibilities of management, the policies & procedures, the social system the organization is used to, and the skills you will need to succeed.
The Information Age
Flying and space travel were science fiction a little more than a century ago, foretold by the likes of Jules Verne and H.G. Wells; today, these are commonplace. But ideas like these belong to the scientific age, an age which is coming to an end. A new age — the information age — is in process.
In the information age, systems are being devised to increase the productivity of the professional at the expense of unskilled workers. These workers will find their jobs eliminated or transformed into something else altogether.
Information technology is no longer in its infancy, but represents a greater transition phase. In his analysis of social and cultural dynamics, Pitirim Sorokin suggests that this transition phase is a cultural transformation similar to the invention of agriculture or the transition from the middle ages to the scientific age, though even more dramatic, due to the faster rate of change.
This accelerated rate of change was discussed by William Conboy as early as the 1960′s. Conboy estimated that the amount of knowledge in existence doubled between 1 AD and 1750. Knowledge doubled again by 1900, 1950, 1960, and Conboy projected it to double again by 1963 and beyond. This doubling has created what is called accelerating returns.
Information is Doubling
It would be difficult to estimate the amount of knowledge in existence today. It must be staggering to think about and yet it continues at an incredible pace. What this curve represents, in line with what Sorokin suggests as a cultural transformation, is that new paradigms, thoughts and adjustments to change will need to be developed in order to survive in the age of information.
Businesses, like their workers, will find their industries transformed or eliminated by IT. Labor based industries are being displaced by skill based. Skill based industries are being replaced by knowledge based. The result will be to find manual labor industries moving to where the labor is cheap and economies shifting to service based knowledge industries.
There is too much happening too fast for us to rely on mechanistic theories of old. New, dynamic or relative theories are needed. The key to management in the future will be in understanding the dynamics of the information age and adapting appropriately. The key to growth is to race with the new technology and not against it. The TED talk by Erik Brynjolfsson provides a great example.
The Speed of Information
Business will no longer be thought of as operating as usual. A focus will be placed on both the speed at which information can be passed through the organization and the importance of that information. Systems will be developed to increase the rate at which information passes, while the importance of information will become the deciding factor in the marketplace. In order to remain competitive, organizations will need to incorporate more information technology while developing a greater understanding of the importance of information and how it relates to workflow and productivity.
In order for information to be used effectively, it must flow easily through the organization. Information quickly becomes useless or obsolete, so it’s important to act on information quickly and decisively to get its full value. Both computers and communication systems are used to increase the speed and efficiency at which information can be passed. Computers are being used increasingly to connect different departments together and thus automating the passage of the information that they rely upon to do business.
More and more management information systems, policy management software, and computer-aided manufacturing systems are being required to establish and maintain a competitive edge. New communication strategies are being designed around the individual, allowing workers and management to conduct business across many miles, electronically, without ever leaving the office.
The advent of email, teleconferencing, and now the paperless office makes this possible. The portability of electronic work at the touch of a button, across the internet, has led to decentralization of offices and the movement of work across country borders.
Importance of Information
John Diebold recognized the importance of information to the organization when stating three of its unique properties:
- The value of information increases as it is used;
- Information is not depleted, but it may become obsolete; and
- It is a basic factor of productive activity, comparable with labor, capitol, energy, and raw materials.
Diebold also stated that one of the problems with management is its belief that automating the office is done mainly as a clerical savings; he felt the emphasis should be on improving the productivity of managers and other professionals.
An example of this belief can be seen in automation dollars spent on office workers in 1977, which varied from $2,000- $6,000 per worker while at the same time the average spent on an industrial worker was $25,000. If businesses are to remain competitive, it is important for management to spend the money required to provide the tools to increase the productivity of all of its workers. This cannot be done, however, until management realizes the important relationship of information technology to worker productivity.
Understanding Information Technology
In order to understand information technology better, Diebold proposed the need for a better methodology relating productivity to automation or rather the concept of the “time value of information.” Accountants and economist have long understood the time value of money and this concept has been used by management to justify decision making. What has happened is that information tools are looked upon as more of an expense then a resource and this attitude needs to change to better utilize information and improve productivity.
Information Technology Facilitates Communication
Information technology is intended to facilitate communication throughout the organization yet, the principle barrier that remains will be the understanding of that information flow and the importance it has to the organization. If this understanding can be achieved then the flow will not be impeded. Information technology systems will be used by all to improve the productivity of all and the company will remain competitive.
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Next, we continue with “Social Systems”. In the meantime, we appreciate your comments.