Telstra productivity survey criticised

Industry analyst says much-vaunted Telstra backed survey does little to help organisation

Telstra CEO David Thodey

Telstra CEO David Thodey

A Telstra-commissioned report into the productivity of large organisations through Information Communication Technology (ICT) investments has been canned by an industry analyst.

IBRS analyst, Guy Cranswick, said the report conducted by Sweeney Research on behalf of Telstra, was not a serious or well structured analysis and did little to help organisations understand how to improve productivity through ICT investments.

Released today, the Telstra Productivity Indicator (TPI), surveyed 300 government and large enterprise leaders across Australia with aim of investigating "the strong linkage between investment in ICT and improving productivity".

The survey was conducted through phone interviews with organisation leaders that had over 200 staff. The final report does not expand further on its methodology except to say:

"The phone interviews consisted of a comprehensive questionnaire exploring these decision-makers’ understanding of how their organisations measure and drive productivity, their attitudes towards new technology, the impact of this technology on the productivity of their organisation as well as their investment priorities."

The main findings of the survey were that a "productivity gap" had widened in Australian organisations with many prioritising organisation productivity but being unable to "accurately measure and manage productivity improvements". In this year's survey only 42 per cent of organisations "can articulate their specific productivity measures and targets" compared to 49 per cent last year.

In the forward to the report, Telstra CEO David Thodey also notes that "the report finds that while most organisations place a high priority on investment in ICT to drive productivity, only about a third believe that their ICT deployment is greatly aligned with the needs of worker groups".

Additionally, the survey found the top two priorities for organisations were improving customer service (78 per cent) and productivity (76 per cent).

However, Cranswick, who was critical of the survey last year, said the report failed to accurately define productivity and failed to deal with the issue of measurement.

The survey, he says, uses components of productive work in a workplace – such as efficiency and working smarter, good service and satisfaction, increased profits, lowering costs, meeting targets and improving market share – instead of actually measuring productivity itself as expressed by the result of output divided by input.

"It proceeds to assert the common claims for higher productivity derived largely from technology. This error is compounded by applying the ICT productivity claim to all levels of the economy and ignores any investment costs associated with it, including on- going costs," Cranswick said. "Differential effects to various sectors of the economy are also conveniently ignored. The other deceptive tactic is to ignore other investments and other sector industrial growth and assign growth, in the main, to the ICT sector."

A 2001 project run by the Organisation for Economic Development (OECD) called the <i>Growth Project</i> found that productivity in the ICT sector can improve an economy's overall productivity.

However, measurement of the linkage between ICT and productivity is a challenge for economists and statisticians. The OECD noted that on the whole ICT does have a positive impact on organisational performance and productivity, yet "uptake and impact of ICT differ across firms, varying according to size of firm, age of the firm and activity".

In its submission to the Senate committee on the National Broadband Network the Australian Productivity Commission noted an "important contributor to Australia’s improved productivity performance in the 1990s was a competitively driven acceleration in ICT use in many industries, including in the wholesale trade, finance and insurance sectors".

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