Information Technology in the Service Society A Twenty-First Century Lever (1994) / Chapter Skim
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6 Information Technology in Services: Implications for Public Policy
6 Information Technology in Services: Implications for Public Policy
Pages 193-214
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From page 193... ...
As discussed in Chapter 2, conditions in different industries have motivated different types and rates of IT application; as discussed in Chapter 3, specific applications arise from conditions, options, and approaches perceived by individual management teams. The accumulated experience with IT in services now raises questions about potential market inefficiencies and implications for social welfare, concerns that may argue for public policy 193
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From page 194... ...
Local job creation may require incentives for local investment. One type of IT-related investment with many local benefits is investment in the domestic telecommunications and information infrastructure.4
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From page 195... ...
To date, market forces have generally worked well in providing access to IT benefits. But in some geographical areas, selectively stimulating the growth of information infrastructure particularly for small business, educational institutions, medical care systems, and the home- could enhance interactions among all these units, promote expansion in both the number and types of jobs in the service sector, and possibly lead to the creation of entirely new service industries.
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From page 196... ...
Thus, although job opportunities diminished in agriculture and more recently in manufacturing due to automation and other factors, the number of people employed overall grew, particularly in service industries. Lower prices and the introduction of new products contributed to growth in employment, particularly in services; service-occupation employment, for example, experienced substantial growth between 1980 and 1990.9 It is precisely this history that troubles some analysts: Will the combined strengthening and slimming of services now trigger (or accompany)
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From page 197... ...
Even if the absolute amount of work or jobs remains constant, people do not tend to move with jobs, and so job movement can have the effect of (local) job displacement.~4 Companies with heavy data-entry requirements (e.g., airlines, insurance companies, and some database service providers)
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From page 198... ...
, these firms and their employment patterns are relatively difficult to track. The most obvious trends suggest principally that job growth (and job levels)
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From page 199... ...
All of these changes are occurring in the context of limited economic growth and structural changes in service industries, as discussed in Chapter 2, plus domestic and international competitive pressures that motivate businesses to seek greater efficiency.20 The trends listed above raise the specter of job displacement (the elimination of specific jobs or the reduction in growth for such jobs compared to what would have been under the original conditions) and job change (changes in the nature and mix of tasks that make up jobs)
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From page 200... ...
The current economic system is characterized by short-term notification of displacement, loss of health insurance and pension plans with job loss, limited outplacement assistance, and limited unemployment insurance and employment service programs. Absent change (such as movement toward portable, universal health insurance)
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From page 201... ...
Problems in collecting and aggregating data are significant reasons why available macroeconomic data neither prove nor disprove claims about the level of impact investment in IT has had on performance in services. The conventional distinctions between manufacturing and services, which underlie the collection, analysis, and presentation of publicly available data, undermine useful analysis.
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From page 202... ...
Insights available through the literature and through interviews tend to be limited to the experiences of large firms researchers tend to find it easier to identify and work with larger films, and that tendency may bias understanding.28 Although the committee did not have the resources to investigate smallercompany practices systematically, members cited examples of individual smaller companies that had developed extremely fast response capabilities, strong cross-functional team-oriented cultures, team management and reward systems, and very productive desktop IT systems for enhancing communications. These enterprises already exhibit many of the characteristics larger companies seek through more disaggregated organization and activity-based competitive structures.
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From page 203... ...
But where competition within an industry is heavy and financial gains are passed through to customers or suppliers as savings, there may not be an obvious correlation between benefits to customers and the firm's or industry's financial performance.30 Progress in developing and using hedonic price indexes suggests that there are some opportunities to develop better measurements of output quality and customer benefits, although delivering against those opportunities may take time and be difficult to realize. The need for better economic statistics has been recognized for some time; it is made more urgent by the cumulative impact of cutbacks in federal statistical programs during the 1980s.
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From page 204... ...
and the Bureau of Labor Statistics (BLS) seek to improve their existing price indexes and to develop auxiliary measures of price change.
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From page 205... ...
The committee urges the federal administration to promote a significant upgrading of statistical programs. At a time when more and more enterprises are recognizing the value of information to the performance and expansion of their businesses, it behooves the government to collect and make use of better information about the changing economy.
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From page 206... ...
Discomfort with capitalizing software over a long period of time arises from difficulties in predicting with reasonable precision the value and life of a software system; there is concern that any piece of software may have a relatively brief useful life, and it may be replaced or upgraded through an ongoing process of "maintenance" that blurs the identity of the software in question. The committee recommends that the Financial Accounting Standards Board (FASB)
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From page 207... ...
For example, as discussed in Chapter 3, electronic databases are being used by more and more organizations to store personal data to support customer service operations, marketing, credit approvals, and other service activities. The proliferation of applications, equipment, networks, and network interconnections means that growing numbers of people have potential access to kinds of data (such as health, income, and credit records)
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From page 208... ...
Such technologies can be used to call up a customer profile based on telephone numbers associated with previous orders, and it can also be used to ignore or give lower priority to service requests that come, for example, from low-income regions of a city. Insurance companies can use detailed information about an individual to generate a customized insurance policy for that individual, but they can also use that information as the basis for denying insurance policies (e.g., for health care)
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From page 209... ...
Software has already given rise to both uncertainty and assumptions regarding the existence or lack of intellectual property protection.44 Particularly relevant to services are the implications of increased electronic networking for the protection of intellectual property associated with materials made available electronically over networks. The debate has just begun in this area.
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From page 210... ...
6Public policy attention to information infrastructure has already expanded considerably during the Clinton administration, and both the 102d and 103d Congresses have introduced related legislation. In addition, both the legislative and executive branches have taken steps to develop and implement a national research and education network program (the NREN component of the High Performance Computing and Communications program)
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From page 211... ...
See "Where the Jobs Aren't," Wall Street Journal, August 10, 1992, table drawing on Kemper Financial Services data. 20The most recent employment conditions reflect a recession and slow recovery.
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From page 212... ...
The software industry has objected that that long period will raise costs and adversely affect international competitiveness, since the useful life of software is only a few years at best. 34According to FASB literature, "The mission of the Financial Accounting Standards Board is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information....
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From page 213... ...
IT use in government was given special consideration in Vice President Albert Gore's National Performance Review-From Red Tape to Results, distributed electronically over the Internet on September 7, 1993. 46The potential for using IT to enhance government is not new to the federal government or lower levels of government.
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