COMM 226

Productivity

Chitu OkoliAssociate Professor in Business Technology ManagementJohn Molson School of Business, Concordia University, Montréal

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Productivity Paradox:If IT is so important, why is it so hard to measure its benefits?

• Measurement error: since IT is everywhere, we often take its benefits for granted and fail to measure all of its positive effects

• Although hard to measure, there are three generally-agreed kinds of effects:1. IT increases organizational productivity

2. IT changes the nature of competition to focus more on software-enabled services

3. IT often results in lowered costs for consumers

CCICT and BTM

• The Canadian Coalition for Tomorrow’s ICT Skills (CCICT) is an industry-led association of employers, universities and industry organizations, founded by Bell Canada in 2007.

• CCICT created the Business Technology Management (BTM) program to ensure that Canadian organizations can hire the IT professionals they need to meet their changing and diverse workforce needs.

How do Information Systems Improve Productivity?• Increasing efficiency means that

business processes for providing the same goods or services can be accomplished either more quickly or with fewer resources and facilities (or both). – “doing things right”

• Increased effectiveness means that the company offers improved or completely new goods or services that the customer values– “doing the right things”

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Business Processes and Value Chains

• A value chain is a network of value-creating activities– Primary activities– Support activities

• Made up of at least one and often many business processes

Porter’s Value Chain Model(product-oriented model)

Primary Activities

• Primary activities are activities in which value is added directly to the product

• There are five primary activities:1. Inbound logistics2. Operations3. Outbound logistics4. Marketing and sales5. Service

• Each stage accumulates costs, but add value to the final product

– Net result is total margin of chain

Support Activities

• Support activities support the primary activities

• There are four support activities:1. Firm infrastructure2. Human resources3. Technological development4. Procurement

• Contribute indirectly to production, sale, and service

• Add value and costs– Their margin is difficult to calculate, because

customers don’t clearly see their effects

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Sources

• Most of the slides are adapted from COMM 226 Business Technology Management by David M. Kroenke, Andrew Gemino, Peter Tingling, and Earl H. McKinney, Jr. 2nd Custom Edition for Concordia University (2014) published by Pearson Canada. ISBN 13: 978-1-269-96956-7

• Other sources are noted on the slides themselves

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