From: Jim Choate <ravage@ssz.com>
Date: Sat, 25 Oct 1997 09:46:12 +0800
To: cypherpunks@ssz.com (Cypherpunks Distributed Remailer)
Subject: Internet drives productivity [CNN]
Message-ID: <199710250209.VAA27412@einstein.ssz.com>
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>                   INTERNET TO RELENTLESSLY DRIVE PRODUCTIVITY
>                                        
>    Reuters
>    24-OCT-97
>    
>    
>    By Neil Winton, Science and Technology Corresdpondent LONDON, Oct 24
>    (Reuters) - Information technology is being lauded as the surprise
>    provider of ever increasing wealth without inflation.
>    
>    Economists in the United States are scratching their heads to solve a
>    problem which the busineses schools suggested was impossible.
>    
>    How is the U.S. economy still powering ahead in top gear with low
>    unemployment without incurring inflation?
>    
>    Information technology is getting the credit, but productivity gains
>    notched up from the use of computers have been overlooked by
>    government statistics.
>    
>    As the Internet age gathers momentum companies around the world will
>    be able to slash costs and gain access to markets which would have
>    been impossibly expensive before.
>    
>    Last week Federal Reserve Chairman Alan Greenspan said real
>    productivity gains associated with computers and telecommunications
>    may not have been fully realised yet.
>    
>    Information technology experts agree. ``The Internet makes smaller and
>    remote companies look big and next door,'' said Bill Rosser, research
>    director at the information technology consultancy Gartner Group in
>    Stamford, Connecticut.
>    
>    ``You can put up your website and your products and bring a presence
>    to a much broader market. Because of its rich delivery capacity a
>    small company in Lichtenstein can win business from General Motors,''
>    Rosser said.
>    
>    ECONOMIC IMPACT DIFFICULT TO PINPOINT
>    
>    The economic impact of information technology is undoubted, but
>    difficult to pinpoint.
>    
>    The problem for economists is how to accurately measure output and
>    productivity in service industries such as banking, law firms,
>    software and services companies generally, which account for an ever
>    increasing percentage of the U.S. and other wealthy economies.
>    
>    It was relatively easy to add up the number of widgets produced and
>    divide the cost by the number of workers employed, but it's not so
>    easy to measure the impact of information technology.
>    
>    ``It's hard for economists to figure this out. I think it's really
>    based on problems with measuring how companies use IT to reduce the
>    number of people needed to do certain tasks,'' said Eilif Trondsen,
>    research director at consultants SRI International in Menlo Park,
>    California.
>    
>    ``Companies like GE (General Electric Co ), and Cisco Systems Inc are
>    finding ways of doing things with a fraction of the people they used
>    to need, using the Internet,'' Trondsen said.
>    
>    GE is one of the U.S.'s biggest companies with major businesses in
>    power generators, appliances, lighting, plastics, medical systems,
>    aircraft engines, financial services and broadcasting. GE earned net
>    profits of $7.28 billion in 1996. Revenues were $79.2 billion.
>    
>    Cisco provides the ubiquitous equipment which links computers across
>    telephone lines over the Internet, pumping electronic mail and digital
>    data around the world. Last year revenues jumped 80 percent to around
>    $4 billion.
>    
>    Bob Chatham, senior analyst at technology researcher Forrester in
>    Cambridge, Massachusetts, points to novel ways that costs can be cut
>    using computers.
>    
>    ``GE in its procuring of supplies and materials can save 15 to 20
>    percent buying online. Some firms can reduce the cost of a purchase
>    order from $45 to around a dollar fifty. New companies like Free
>    Markets Online will run an (virtual) auction for you and cut costs
>    about 22 percent,'' Chatham said.
>    
>    Pittsburgh, Pennsylvania based Free Markets Online targets markets
>    such as plastic injection moulding or metal casting in which hundreds
>    of companies compete for contracts, and sets up virtual auctions using
>    its software to make the cheapest possible deals.
>    
>    HOW INFORMATION TECHNOLOGY HELPS BUSINESS
>    
>    SRI's Trondsen said the use of information technology can create a
>    seamless flow of information through a company so that it can become
>    more productive. Orders flow in and automatically trigger inventory
>    and production decisions which have a big positive impact on
>    productivity. Bills are settled electronically.
>    
>    ``The Internet helps companies find suppliers they didn't even know
>    existed,'' according to Trondsen.
>    
>    Gartner's Rosser said IT can make more information available to
>    workers to let them make decisions on their own where supervisors
>    would have needed to intervene previously.
>    
>    ``It makes them smarter. It enlarges the jobs because they've got the
>    data. You don't have to talk to the supervisor, you see it (the data)
>    and bingo, take action,'' Rosser said.
>    
>    ``This is bringing huge improvements, but we are not seeing this in
>    economic statistics. Now the future is with the Internet, that's what
>    Greenspan was talking about,'' said Rosser.
>    
>    ``This is all about maximising the use of your intellectual
>    capacity.''
>    
>    But won't all this labour saving technology result in huge swathes of
>    unemployment around the world, and leave the competition in places
>    like Europe in permanent second place?
>    
>    SRI's Trondsen said Europe will catch up, but more bureaucratic
>    organisations which lack the necessary corporate culture will have
>    problems.
>    
>    According to Rosser, short term upheavals will become long term
>    benefits for all.
>    
>    ``Well yes, the buggy-whip makers will always go out of business. Most
>    long term studies show lots of temporary problems, but ultimately we
>    will get workers applied elsewhere to produce more goods and value
>    added services,'' Rosser said.