OPPORTUNITIES BEFORE EFFICIENCIES

There is no doubt that many past purchases…

…of computer systems were bungled, mismanaged, and squandered. Last year 8,000 mainframe computers–computers with the power of a Unix box and the price of a large building–were sold to customers imprisoned by legacy systems. IBM alone sold $5 billion worth of mainframes in 1997. Those billions don’t help the efficiency ratings. The year 2000 fiasco is a world-scale screwup that also saps the payoff from information technology. But according to economic historian Paul David, it took the smokestack economy 40 years to figure out how to reconfigure their factories to take advantage of the electric motor, invented in 1881; for the first decade of the changeover productivity actually decreased. David likes to quip that “In 1900 contemporaries might well have said that the electric dynamos were to be seen ‘everywhere but in the economic statistics.’ ” And the switch to electric motors was simple compared to the changes required by network technology.