Information Technology and Information Technology Trends

There are several ways in which one can define information technology. The US Bureau of Economic Analysis appears to define it in terms of office, computing, and accounting machinery. Others consider information technology as equivalent to information-processing equipment, which includes communications equipment, computers, software, and related office automation equipment.

Still others speak about the technologies of the information revolution and identify such technologies as advanced semiconductors, advanced computers, fiber optics, cellular technology, satellite technology, advanced networking, improved human-computer interaction, and digital transmission and digital compression. We would not quarrel with the content in this list, although we would certainly add software and middleware technology.

It could be argued that software is intimately associated with advanced computers and communications. This is doubtlessly correct; however, there is still software associated with the integration of these various technologies of hardware and software to comprise the many information technology based systems in evidence today and which will be in use in the future.

Several trends transcend debates about technology alternatives—currently alternatives such as PCs versus Net PCs or ISDN versus cable. These overriding trends concern directions of computer and communications technologies, and the impacts of these directions on knowledge management and organizations.

The information revolution is driven by technology and market considerations and by market demand and pull for tools to support transaction processing, information warehousing, and knowledge formation. Market pull has been shown to exert a much stronger effect on the success of an emerging technology than technology push.

There is hardly any conclusion that can be drawn other than that society shapes technology or, perhaps more accurately stated, technology and the modern world shape each other in that only those technologies which are appropriate for society will ultimately survive.

The potential result of this mutual shaping of information technology and society is knowledge capital, and this creates needs for knowledge management. The costs of the information technology needed to provide a given level of functionality have declined dramatically over the past decade—especially within the last very few years—due to the use of such technologies as broadband fiber optics, spectrum management, and data compression.

A transatlantic communication link today costs one tenth of the price that it did a decade ago, and may well decline by another order of magnitude within the next three or four years. The power of computers continues to increase and the cost of computing has declined by a factor of 10,000 or so over the past 25 years. Large central mainframe computers have been augmented, and in many cases replaced, by smaller, more powerful, and much more user-friendly personal computers.

There has, in effect, been a merger of the computer and telecommunications industries into the information technology industry and it now is possible to store, manipulate, process, and transmit voice, digitized data, and images at very little cost.

Current industrial and management efforts are strongly dependent on access to information and associated knowledge. The world economy is in a process of globalization and it is possible to detect several important changes. The contemporary and evolving world is much more service oriented, especially in the more developed nations. The service economy is much more information- and knowledge-dependent and much more competitive.

Further, the necessary mix of job skills for high-level employment is changing. The geographic distance between manufacturers and consumers, and between buyers and sellers, is often of little concern today. Consequently, organizations from diverse locations compete in efforts to provide products and services. Consumers potentially benefit as economies become more transnational.

The information technology revolution is associated with an explosive increase of data and information, with the potential for equally explosive growth of knowledge. Information technology and communication technology have the capacity to change radically the production and distribution of products and services and, thereby to bring about fundamental socioeconomic changes. In part, this potential for change is due to progressively lowered costs of computer hardware.

This is associated with reduction in the size of the hardware and, therefore, to dematerialization of systems. This results in the ability to use these systems in locations and under conditions that would have been impossible just a few years ago. Software developments are similarly astonishing.

The capabilities of software increase steadily, the costs of production decrease, reliability increases, functional capabilities can be established and changed rapidly, and the resulting systems are ideally and often user friendly through systems integration and design for user interaction.

The potential for change is also brought about due to the use of information technology systems as virtual machines, and the almost unlimited potential for decentralization and global networking due to simultaneous progress in optical fiber and communication satellite technology.

The life cycle of information technology development is quite short and the technology transfer time in the new “postindustrial,” or knowledge-based, society brought about by the information revolution is usually much less than in the Industrial Revolution. Information technology is used to aid problem-solving endeavors by using technologically based systems and processes and effective systems management.

Ideally, this is accomplished through:
- Critical attention to the information needs of humans in problem-solving and decision-making tasks
- Provision of technological aids, including computer- based systems of hardware and software and associated processes, to assist in these tasks

Success in information technology and engineering-based efforts depends on a broad understanding of the interactions and interrelations that occur among the components of large systems of humans and machines. Moreover, a successful information technology strategy also seeks to meaningfully evolve the overall architecture of systems, the systems’ interfaces with humans and organizations, and their relations with external environments.

As just discussed, the most dominant recent trend in information technology has been more and more computer power in less and less space. Gordon Moore, a founder of Intel, noted that since the 1950s the density of transistors on processing chips has doubled every 18 to 24 months. This observation is often called ‘‘Moore’s Law.’’ He projected that doubling would continue at this rate.

Put differently, Moore’s Law projects a doubling of computer performance every 18 months within the same physical volume. Schaller discusses the basis for Moore’s Law and suggests that this relationship should hold through at least 2010. The implication is that computers will provide increasingly impressive processing power. The key question, of course, is what we will be able to accomplish with this power.

Advances in computer technology have been paralleled by trends in communications technology. The Advanced Research Projects Agency Network, or ARPAnet as it is commonly called, emerged in the 1960s, led to the Internet Protocol in the 1970s, and the Internet in the 1980s. Connectivity, or the ability to connect to almost any destination, is now on most desktops, E-mail has become a ‘‘must have’’ business capability, and the World Wide Web is on the verge of becoming a thriving business channel. The result is an emerging networking market.

Business publications are investing heavily to attract readers—or browsers—of their on-line publications. Telecommunications companies are trying to both avoid the obsolescence that this technology portends and to figure out how to generate revenues and profits from this channel. The result has been a flurry of mergers and acquisitions in this industry.

These strong trends present mixed blessings for end-users. The dramatic increases of processing power on desktops is quickly consumed by operating systems, browsers, multimedia demos, and so on. The escalating availability of data and information often does not provide the knowledge that users of this information need in order to answer questions, solve problems, and make decisions. The notion of ‘‘data smog” has become very real to many users.

Not surprisingly, data smog possibilities encourage opportunities for technologies for coping with data smog. For example, ‘‘push’’ technology enables information to find users. Another possibility is “intelligent agent’’ technology whereby users can instruct autonomous programs to search for relevant data and information.

While these types of capabilities are far from mature, they appear quite promising. The specifics of the above trends will surely change—probably by the time this article appears in print. However, the overall phenomenon of greater and greater processing power, connectivity, and information will be an underlying constant.

That the price of computing has dropped in half approximately every two years since the early 1980s is nothing short of astounding. Had the rest of the economy matched this decline in prices, the price of an automobile would be in the vicinity of $10.

Organizational investments in information technologies have increased dramatically and now account for approximately 10% of new capital equipment investments by US organizations. Roughly half of the labor force is employed in information related activities. On the other hand, productivity growth seems to have continually declined since the early 1970s, especially in the service sector that comprises about 80% of information technology investments.

This situation implies the need to effectively measure how IT contributes to productivity, to identify optimal investment strategies in IT, and to enhance IT effectiveness through knowledge management for enhanced productivity.

On the basis of a definitive study of IT and productivity, Brynjolfsson and Yang (8) draw a number of useful conclusions. They suggest that the simple relationship between decreases of productivity growth in the US economy and the rapid growth of computer capital is too general to draw meaningful conclusions. In particular, poor input and output data quality are responsible for many difficulties. Many of the studies they review suggest that the US economy would not be enjoying the boom that it is enjoying in the latter half of the 1990s without information technology contributions.

Their study suggests improvements in accounting and statistical record keeping to enable better determination of costs and benefits due to IT. They support the often expressed notion that information technology helps us perform familiar tasks better and more productively, but that the greatest improvement is in enabling us to perform entirely new activities that would not be possible without these new information technologies.

One of these, for example, is the ability to make major new product introductions into the world economy with no macro-level inventory changes being needed. They indicate some of the new economic and accounting approaches that are needed to provide improved measures for performance evaluation, such as activity based costing and activity based management.

Although information technology does indeed potentially support improvement of the designs of existing organizations and systems, it is also enables the creation of fundamentally new ones, such as virtual corporations and major expansions of organizational intelligence and knowledge. It does so not only by allowing for interactivity in working with clients to satisfy present needs, but also through proactivity in planning and plan execution.

An ideal organizational knowledge strategy accounts for future technological, organizational, and human concerns, to support the graceful evolution of products and services that aid clients. Today, we realize that human and organizational considerations are vital to the success of information technology.

This is clearly the network age of information and knowledge. One of the major challenges we face today is that of capturing value in the network age. Associated with these changes are a wide range of new organizational models. Distributed collaboration across organizations and time zones is becoming increasingly common.

The motivation for such collaboration is the desire to access sources of knowledge and skills not usually available in one place. The result of such new developments in information technology as network computing, open systems architectures, and major new software advances has been a paradigm shift that has prompted the reengineering of organizations; the development of high-performance business teams, integrated organizations, and extended virtual enterprises; the emergence of loosely-structured organizations and has enabled the United States to regain the productive edge that it once had but lost in the 1980s and early 1990s.