Computer Technology in the Workplace

¶ … Computers Have Influenced Business & the Commercial Work Environment

This paper considers how computers have influenced the workplace environment, how they may give a competitive advantage or add value. The paper also considers how the value may not be as great as perceived by considering the productivity paradox. The bibliography cites 10 sources.

Computers in the Work Environment

The commercial environment has changed over the last few decades. One of the most influential factors has been the development of the computer. The technology has created a social and commercial revolution, increasing the speed and accuracy of communication reducing man hours for tedious tasks and creating new methods of analysis and business practice. However, there are many conflicting reports regarding the way that computers have been used and the benefits they may bring. Therefore, computers in the workplace may be seen as essential, but the value they add is sometimes questionable. In this paper we will consider the way that computer technology may be used and some of the problems we may find in seeking to assess the way it will adds to the value chain. However, when we look at computers, we must understand that it is not only computers that we need to consider, but the programmes that they run, as without these they have no value.

Computers have provided new ways of analysing and utilising information and well as communicating. Some companies have sought to develop their computer technology to create a competitive advantage. The need for a company to have a competitive advantage is well established. Michael Porter has argued this and has defined two sources of competitive advantage, that of cost advantage, where an organisation can produce the goods or services at a lower cost than that of their competitors, or advantage by differentiation where the company can be seen as a different from the competition either in the product they make or other aspects of the business such as customer services. Where the advantage is only temporary such as with a first mover advantage there is a continual struggle to create and maintain new advantages, but where an advantage can be kept and is sustainable this gives the company a strategic advantage. In the search for a sustainable competitive advantage we can see that many have argued that information technology can play a vital role (Thompson, 1998, Mintzberg et al., 1998).

The use of technology can help in attaining an competitive advantage by aiding the reduction or elimination of trading barriers and improving supplier or customer relationships. However, just as it brings advantages it must also be recognised where there is a reduction in barrier this may also herald the entrance of new competitors.

There have been many studies regarding the connection between information technology and competitive advantage. In general terms they have been examined in two ways, the economic results and the practical outcomes where it is added value and strategy that is noted. In both ways of measuring the advantage there are proven successes, however the economic advantage appears to last only for a couple of years after the investment whereas the practical advantage appear to continue for longer.

Therefore, we must argue that sustainable competitive advantage will not lie in the cost advantage outlined by Porter, but in his second paradigm by way of aiding the creation and maintenance of differentiation (Thompson, 1998). If this is the case there is much to lend credence to the idea that the competitive advantage will require continual development and evolution in order to remain an advantage (Thompson, 1998).

It is here that there may be problems in terms of the financing of the development of a competitive advantage, as the formulation and the continued development all require some capital investment in terms of facilitating the research. For the smaller companies this may be difficult and it is for this reason we see an interesting phenomenon. It is well-known that in information technology developments often emanate from smaller companies, it is for this reason we often see innovative designs and potential tools for competitive advantage developed in a collaborations where a larger firm may provide the funds and the smaller company the more specialised knowledge. An example of this can be seen as the way that AT&T in the United States have formed many partnerships with smaller companies, in this way they spread the risk, however, if a development is a success they will usually buy out the smaller partner due to the inequality of power in the partnership (Thompson, 1998). This way they gain the best of both worlds, the development of the advantage with experts and shared risks, but by buying the smaller company out they retain the competitive advantage may create.

Although the potential increase in productivity has been noted by many commentators the question still remains although a theoretical advantage, does the theory translate its perceived benefits to actual tangible results. Technology has impacted in some way on practically every business, and a global or international company cannot avoid it. In order to understand the range a possible implications and increased productivity the various way it can be implemented and used requires examination. However whilst reading this it may be advisable to beware the perils of to heavy a reliance on information technology, if were remember the stock market crashes of the 1990's many of these were blamed on intelligent computer systems which had been set up to but and sell shares at set limits. When stock markets fell these information systems and the resultant actions from the computers compounded the falls. It id also worth remembering that the information system will only be as strong ads its weakest point, and that this will be determined by it human designers, programmers, and engineers. Therefore, potential increased productivity does not come without risks. In order to examine this in more detail a case study will be used of a company that has used information technology in a variety of ways. For the purposes of this paper a well-known global company will be used; Royal Dutch Shell, otherwise known world-wide as Shell.

Shell is the third largest oil company in the world (Davis, 2000). The globalisation of Shell can be argued to have started in earnest in 1915 when the first United States office was opened in California (Davis, 2000). At this time the twentieth century looked like a new commercial era, new communications technology and transportation was available, and although this may seem basic and hardly technological in the modern sense that we perceive when entering the twenty-first century it was to herald what was to follow.

Shells fortunes have risen and fallen over the intervening decades. It was the seventies which would see Shells position suffer. In the decade of the seventies there were seven large influential oils companies. Shell was the weakest (Mintzberg et al., 1998). Arguably Shell, with Exxon are now probably the strongest (Mintzberg et al., 1998). This new strength is now reflected in its use of information technology to its advantage. However there are still many macro factors which it cannot control or influence. The information technology structure and programmes it uses must be able to cope and adapt to these externalities which can include political economic social and economical changes in addition to environmental demands and legalities. Therefore information is of primary importance in order for the company to make the most advantageous decision regardless of whether it is a public relations exercise or a decision on which part of a sea bed to explore for oil.

The first major change in Shell's management strategy was in 1971 when the analysts predicted major changes in the steady growth that the industry was currently benefiting from. The planners informed the decision makers but the organisation failed to change so that it would be able to adapt. The planners were frustrated and their goals changed from planning for the future; "Our real target was the microcosm (the "mental model") of our decision makers" (quoted in Mintzberg et al., 1998). In doing this we see a use of information technology in a subtle and innovative way. To change this individual and cultural attitude the scenario tool was used. Operations managers were asked to consider a variety of situations and circumstances. They then projected the way they would manage and control the situation (Mintzberg et al., 1998). The planners did not need the managers to believe the results in an absolute sense, only that they would be involved in the consideration of the process and in doing this they would be ready for change (Mintzberg et al., 1998). The technology was a tool to facilitate development rather than the development, but in facilitating this type of scenario planning it was to indicate one of the effective ways in which Shell would continue to use communications information.

This started the process of change and the new structure and style of management which was almost inadvertently based on a learning organisational model which utilsed technology to its advantage teaching and preparing managers for change so that when it happened they adapted and thrived from the lessons learned (Mintzberg et al., 1998).

Since then new learning tools have been developed which have included more group scenarios and decision making tools and shell can be seen as a true learning organisation.

New technology has facilitated this with ease as study groups may never meet up with each other, but communicate with the planners by e-mail. Shell has even participated with the MIT centre for organisational learning (Fulmer, 1995).This centre has noted the way in which a common factor in many learning organisations has been the use of information technology. Many learning organisations utilise this as a tool which aids productive behaviour and helps it adopt to the changing situations. This attitude to technology can be seen throughout the organisation. The increased skills this training and time saved. In the use of technology has now been seen to show productive results in the use of manpower hours.

This would indicate that the use of computers and the associated technology will create added value, however, the evidence for this is also contradictory, and with the advent of computers we also have the emergence of the productivity paradox. Individual cases may show that increased use of technology increases productivity, but the empirical evidence demonstrates a different pattern (Patterson, 2000, Lichtenberg, 1995).

The paradox is a difficult one, as the higher the amount invested in IT and copmputers the higher we would expect to find productivity, otherwise there would be no other reason to invest and the aspect of pure cost reduction is an unsustainable argument in most cases (Business Line, 2000). This does not appear to be the evidence we would expect, throwing out the purpose and productivity of IT investment into great question. There have been countless studies that have not only demonstrated a lack of increased productivity, but had actually indicated a negative correlation between the investment in IT and the productivity rates (Business Line, 2000, Lichtenberg, 1995). This can also be expanded in terms of economic measurements with an overall downward trend since the introduction of the computer into the work place (Business Line, 2000).

Economist Robert Solow has made an observation that may give us the clue to this paradox, as he tells us that when we look around we are surrounded by computers, and that the one place they appear to be lacking is in the productivity statistics (Anonymous, 2001). Indeed when we look to the productivity statistics form the introduction of computers in business with a very definite and prolonged downturn ever since the 1960's (Anonymous, 2001).

There are many explanations to this, and one of the most widely accepted is that the way in which we measure productivity may not be suitable for the digital age where products may exist only in virtual world. And information can be seen as playing such a major role in an economy (Anonymous, 2001). Another argument is put forward by the technophobes which argue that the productivity is not influenced by new technology (Anonymous, 2001).

If we look to consider this in a more specific sense we can look to one of the worlds largest economies where technology is well established, for this we will look the United States. Here there is an economy that is neither totally digital, remaining partly mechanised in the older more established sense as well as the more modern technological sense (Anonymous, 2001). There has been seen an established and well documented desire for the mechanical production techniques to be updated and changed so that there is a higher level of automation that can speed up production and increase efficiency.

The automation of these mechanical production lines has worked as productivity in the sectors has increased, with the growth rate in both agriculture and manufacturing where there has been very high levels of automation over the last century increasing at between 3% and 4% (Anonymous, 2001).

This would look to demonstrate that in real terms there is an increase, but this is not the case. There has also been a growing trend towards the service sectors, and in many western nations as well as eastern countries the majority of jobs are now in the service sector, this is a move away form the more traditional production jobs. However in this sector the growth in productivity has been a lot lower, usually at a rate of less than 1% (Anonymous, 2001). Here it has been very hard to find ways of increasing production through investment in IT.