Pro­duc­tiv­ity should rise as of­fices turn to tech

The Daily Telegraph - Business - - Business Comment - James Tit­comb

An en­dur­ing mys­tery since the fi­nan­cial cri­sis has been that al­though tech­nol­ogy is in­creas­ingly cen­tral to how we live, we seem not to be­come bet­ter work­ers be­cause of it. Pro­duc­tiv­ity has been stub­bornly low. Eco­nomic out­put per hour rose at just 0.3pc a year in the 2010s, ac­cord­ing to the Of­fice for Na­tional Sta­tis­tics, dis­as­trous com­pared with the 2pc in the decade be­fore 2007. Global fig­ures are hardly bet­ter, sug­gest­ing this is not a prob­lem unique to the UK.

That this has hap­pened dur­ing a technologi­cal boom makes it all the stranger. Com­put­ers are bet­ter than be­fore the fi­nan­cial cri­sis, and they fit in our pock­ets, mak­ing in­for­ma­tion and com­mu­ni­ca­tion per­va­sive. In­ter­net con­nec­tions are faster and more re­li­able.

It’s pos­si­ble that this is part of the prob­lem – a Bank of Eng­land an­a­lyst sug­gested in 2017 that a “cri­sis of at­ten­tion” from emails and so­cial media could be be­hind the pro­duc­tiv­ity stag­na­tion – but it is un­likely to be the en­tire an­swer. Some parts of the world have dra­mat­i­cally in­creased pro­duc­tiv­ity, Sil­i­con Val­ley in par­tic­u­lar, and staff there are likely to spend as much time as any­where on their smart­phones.

An al­ter­na­tive theory has been that not enough tech­nol­ogy, rather than too much, is to blame. For decades, the most ad­vanced piece of tech most white col­lar work­ers came into con­tact with was the one in their of­fice. To­day, it is far more likely to be a con­sumer prod­uct – the lat­est iPhone or the highly ad­dic­tive TikTok al­go­rithm. Noth­ing in the cor­po­rate world comes close. Ob­so­lete ver­sions of Mi­crosoft Win­dows are far more com­mon in of­fices than at home. Ac­cess to cru­cial soft­ware is still of­ten hard­wired to phys­i­cal net­works, mak­ing them in­ac­ces­si­ble when away from a company’s base.

If a lack of in­vest­ment in IT is part of the pro­duc­tiv­ity prob­lem, it is even less un­der­stand­able be­cause new of­fice tech­nol­ogy has ex­ploded over the past decade. Busi­ness soft­ware is a thriv­ing, ul­tra-com­pet­i­tive mar­ket.

Firms such as Slack, Zoom, Drop­box, Stripe and Okta have all been founded since the last cri­sis. They dif­fer in the tech­nol­ogy pro­vided, but all count as “soft­ware as a ser­vice”, a broad term mean­ing pro­grammes li­censed to com­pa­nies and pro­vided over the in­ter­net rather than be­ing man­u­ally in­stalled and up­dated.

The idea is not new – Bill Gates called it the “next sea change” 15 years ago – but has been adopted rel­a­tively slowly, given the ben­e­fits of reg­u­lar up­dates and ubiq­ui­tous ac­cess it prom­ises. The com­pa­nies most likely to em­brace on­line soft­ware have been sim­i­lar types of busi­nesses, in par­tic­u­lar tech start-ups. Slack and Zoom were com­mon in Sil­i­con Val­ley well be­fore the pan­demic sent them ex­plod­ing across the main­stream. Such soft­ware is bet­ter de­signed and eas­ier to use, since it has had to com­pete against es­tab­lished in­cum­bents, and be­cause its most ac­tive users are opin­ion­ated techies. Up­dat­ing on­line, rather than re­quir­ing com­pa­ny­wide in­stal­la­tions, it can more quickly in­tro­duce the lat­est de­vel­op­ments in ma­chine learn­ing and au­to­ma­tion. Last week, for ex­am­ple, Mi­crosoft added a fea­ture to its on­line ver­sion of Word that au­to­mat­i­cally tran­scribes phone calls and record­ings. Of­fice dwellers us­ing a hard copy of Word in­stalled from a CD-Rom will miss out.

It is hard to con­clu­sively say that soft­ware as a ser­vice makes work­ers more pro­duc­tive. How does one com­pare the po­ten­tial dis­trac­tions of Slack, which lets work­ers com­mu­ni­cate in cha­t­rooms, to the time-con­sum­ing meet­ings it has helped re­place? But we can say that the start-ups and tech com­pa­nies that have em­braced new sys­tems to date have been a more vi­brant part of the econ­omy than av­er­age.

Ei­ther way, the pan­demic has thrust de­mand for bet­ter IT into the wider world. Com­pa­nies are in­vest­ing heav­ily in on­line busi­ness soft­ware on the back of wide­spread work­ing from home, and the prospect is this pat­tern will con­tinue in fu­ture, al­low­ing them to con­tinue op­er­at­ing while work­ers are not at their of­fice desks.

Last week, cus­tomer ser­vice soft­ware maker Sales­force be­came the world’s first soft­ware as a ser­vice company to en­ter Amer­ica’s Dow Jones In­dus­trial Av­er­age stock in­dex, a land­mark mo­ment. A day later, it an­nounced a 29pc rise in quar­terly rev­enues, partly due to sign­ing more con­tracts with big busi­nesses such as AT&T.

A suite of on­line soft­ware com­pa­nies fol­lowed dur­ing the week, most say­ing the rise of work­ing from home had forced com­pa­nies to sign up.

Okta, a dig­i­tal iden­tity ser­vice that pre­vents im­pos­tors and hack­ers from log­ging in to im­por­tant work sys­tems, said sales had risen 43pc. Since it in­te­grates with most other ser­vices, it can be seen as a barom­e­ter for the wider rise of on­line busi­ness soft­ware. A stock in­dex that tracks soft­ware as a ser­vice com­pa­nies has more than dou­bled since mid-March.

To­day, many busi­nesses are be­ing en­cour­aged to bring their staff back to work. Whether that hap­pens this year or next, or in­deed at all, re­mains to be seen.

But the big change might be in how we work, not where. Even if there is a mi­gra­tion back to the phys­i­cal of­fice, many work­ers will be go­ing back with bet­ter dig­i­tal tools and ways of work­ing – more video meet­ings, on­line ac­cess and the lat­est fea­tures.

That might not be enough to solve the pro­duc­tiv­ity co­nun­drum. But it is at least a start.

Many will be go­ing back to of­fices with bet­ter dig­i­tal tools and ways of work­ing

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