Review of "Information Productivity"

The Proof of the Pudding
Review of "Information Productivity"
by William Sheridan, InSite
July, 1999

The Proof of the Pudding

In our future, as technology advances, so will the demand to access massive amounts of relevant information. Furthermore, as markets change, companies and organizations will run into global competitors that increasingly look to information and information technology for competitive advantage.
-- Gary Cokins

Cockins' quote is the context within which Paul Strassmann has been asking some very penetrating questions about information management. There are many ways to word these questions, but this is their gist:

Do businesses manage their information effectively?
Do businesses experience gains from their IT investments?
Can businesses measure the productivity of the information they use?
Can the business costs of computers and information services be justified?

Rather than just idly speculating, Strassmann actually researches these questions while conducting his consulting work. Since his reputation gives his access to some of the biggest and most notable corporate clients in the United States, he is able to directly gather the representative indicators to begin answering his questions. He then personally manages the analysis of that corporate data, thereby being able to both attest to the reliability of the analytical technquies AND the veracity of the results.

Strassmann's first report on the current phase of his research was his previous book THE SQUANDERED COMPUTER. Just the title gives a pretty good idea of what his message is! In this newest book, Strassmann extends his analysis to show how precariously balanced is the computerization justification. The answers to his four questions are: No, No, No, and No. The problem is, that activity-based cost management has NOT been used to guide or evaluate spending on information management. Instead IM/IT is expensed as an overhead cost. This disguises the fact that in many cases, information management is a cost centre rather than a source of value-added. AND since information management costs are now generally more important than capital costs, the mis-management and waste in this area is appalling.

INFORMATION PRODUCTIVITY is a very important book because it both diagnoses the problem AND provides a prescription for better results. Currently popular accounting methods CANNOT deal with the economic role of information. Economic value-added cost-activity management can both demonstrate the contribution of information management AND provide the basis for improving performance.

Strassmann's analysis suggests that most of the recent gains in productivity have come from effective macro-economic management of national interest rates by Alan Greenspan rather than from bloated software from the likes of Bill Gates. The recent Microsoft decision to focus on networked computing rather than the desktop as the frontier of IT, is telling in this regard. Any general improvement in information productivity will require both proper accounting AND more effective technology. A combination of Strassmann's Information Productivity® methodology for the purposes of relative ranking and benchmarking comparisons, and Gates' Office 2000 Application Suite and Windows 2000 Operating System for better integrated performance, could be the start of value-adding IM and IT. And the priority has to be Strassmann's methodology -- because only with an understanding of the productivity problem and a plan to improve it, is there a basis for building a business case for effective IT acquisition and information management.