Customer Reviews

The Business Value of Computers: An Executive's Guide

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Popular belief is that increased use of computers correlates with superior business performance. But the evidence I had seen has been at best anecdotal. I couldn't find anything that looked like solid scientific evidence - statistically meaningful sample sizes, random choice, proper statistical methods. Then I bumped into this book. Strassmann shows that there is NO correlation. Then he proceeds to show what DOES correlate with superior business performance. Briefly, if you divide a firm's total budget into 'sharp end' (the folks in the workshop) and 'blunt end' (management and the folks in the back office), the bigger the blunt end the worse shape they will tend to be in. If you then again split the computer related budget into 'in support of sharp end' eg ATMs, and 'in support of blunt end' eg management information systems, the sharp end systems tend to pay off and the blunt end ones tend not to. And the two tend to cancel out.

I had always suspected this, but it still shook me to my roots.

I think his 'Return on Management' measure is flawed - it looks just like 'profit' to me - but otherwise reading this was an epiphany.

Looking for useful measures of the payoff of information systems is a real challenge, and Strassmann goes far into it.

He also explodes the theory that profit is a good measure - how do we measure how well run the business is if it is a welfare society, or a public transport system?

A wonderful book.

This is the definitive book on "knowledge capital" (his trademarked term) and how to calculate shareholder value in the New Economy. In general, one should buy this book to be persuaded of Paul's brilliance, and then hire him to implement the ideas as a strategic consultant. Not for the weak-minded CEO or CIO, as it impales most corporate oxes and concludes that in general, there has been either a negative return on investment, or no discernible contribution to corporate profit, from steadily increasing information technology budgets.