Posted by: mikepearsonnz | November 9, 2009

What ICT investment will most increase your productivity?

Broadband increases productivity, faster broadband does not

A recent New Zealand study (Grimes, Ren and Stevens, 2009) found that broadband adoption boosts productivity BUT no productivity differences were found with different speeds of broadband.  That finding is a surprise because faster internet access is often touted as a productivity-enhancing factor for businesses.

This study highlighted for me,  the need for rigorous research to quantify the benefits from investing in different forms of ICT.   It also led me to a Finnish study (Marilanta and Rouvinen, 2006) which evaluated the use of different types of “readily accessible technology” (laptops, data processing and  storage devices networked with wireless capability) at the business firm level.

New technology in conjunction with older technologies can increase productivity

The Finnish study has some important productivity principles about technology, which I paraphrase below:

  1. a technology does not boost productivity – it  possesses characteristics that do,
  2. a technology may be seen as a bundle of its characteristics, each having a separate productivity effect
  3. a technology may possess many characteristics and many of them are shared, and
  4. a technology used in conjunction with others may possess characteristics different from the same technology used separately.

“Even though diminishing returns on ICT occur as its usage expands, it is possible that new characteristics added to old technologies and new technologies working in conjunction with older ones may continuously shift the productivity frontier.”

What ICT investment will most increase your productivity?

The Finnish study found that businesses who use computers and networks already achieve the following productivity increases:

  • processing and storage capabilities, +9%
  • wired connectivity +14%

Their findings also suggest the potential for productivity gains in less common technologies:

  • portability +32%
  • wireless connectivity +6%

Their research was carried out several years ago now, when wireless was in its infancy.  Perhaps this explains why smartphones are defying the worldwide economic recession.

Are NZ businesses thinking about new ways of doing things / new opportunities – or are they just swapping 1 word processor with another 1? Research seems to indicate the latter, , faster broadband does not mean greater productivity.


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