It`s 15 years since Nobel Economics Prize winner Robert Solow declared that computers had failed to improve productivity. His infamous declaration, "you can see the computer age everywhere these days except in the productivity statistics", became a mantra for anyone wanting to negate the impact of IT.
There are, however, numerous flaws in what has come to be known as the Solow Paradox. Not least of these is that you certainly do not see computers everywhere (and you especially did not back in the mid-1980s), and that productivity is only one measure of the impact of IT. Moreover, some of what computers do is not counted in economic statistics, argues another leading academic, Jack E Triplett of the Brookings Institution, writing in The Canadian Journal of Economics.
The irony is that, among SMEs, business owners and managers tend to have a far better handle on their expenditure on IT.
Arthur Goldstuck, MD of World Wide Worx
"You may not see computers everywhere, but in the industrial sectors where you most see them, output is poorly measured," he says. "Examples are finance and insurance, which are heavy users of IT and where even the concept of output is poorly specified."
It is not surprising, then, that in the small and medium enterprise (SME) sector, even less is known about the impact of IT. The irony is that, among SMEs, business owners and managers tend to have a far better handle on their expenditure on IT. In many cases, it`s because they are aware of every cent being spent in their business, and of every bottleneck that arises or is solved as a result of that spending.
Consequently, it is usually easier to measure the impact of such spending, both on costs and on effectiveness, among SMEs than among corporate entities. However, because the focus of research is usually on large organisations, this impact has not been effectively measured. It is this gap in research that has inspired the SME Survey 2003.
Key drivers
The survey is not only an attempt to address the gap in IT knowledge, but also to gain an understanding of the impact of business and financial services on SMEs.
In recent years the role of financial services has become almost indistinguishable from that of IT in addressing the needs of small business, particularly in terms of connectivity and online banking, and the business services that fall between these two and integrate them. It is for this reason that the sponsors of the project include Absa, which is supporting the project as part of a process of understanding both the needs and experiences of SMEs, and PricewaterhouseCoopers, which regards entrepreneurs as key drivers of business growth.
The primary sponsor of the project, HP, expects to get a clear perspective of the benefit of IT to small business. That, in turn, will enable the company to better focus its services to SMEs in a way that will support their business goals rather than merely increase their costs. Business goals, of course, do not only entail productivity, but that is always the starting point in the promise of IT.
Early results from the SME Survey 2003 show that SME decision-makers believe IT is more likely to increase than to decrease productivity, as Solow implied. But more important, the research indicates great expectations regarding the future impact of IT on productivity. Most SMEs are either positive or very positive about the effect of their current IT investment in the future, compared to most being neutral or positive about past investment.
And that is focusing only on the one aspect of IT highlighted by Solow. The SME Survey 2003 goes much further. Rather than focus only on productivity, it looks at a far broader measure of the impact of IT on business, namely at profitability, cost and market share, along with productivity. These four measures, taken together, add up to an effective measure of overall competitiveness.
The extent to which all four receive a high or low rating from SME decision-makers will provide the IT industry with its first scientific evidence on the gaps in their service delivery to small and medium businesses. And, for the first time, small companies will truly have a big voice in the way the IT industry as a whole addresses their needs.
To take part in the SME Survey 2003, go to https://www.smesurvey.co.za/
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