GRA6821 Seventh lecture: IT economics – and meeting Microsoft

(October 16, 0800-1045, C2-040)

The seventh lecture will be in two parts. One is a discussion of IT economics, with an assignment to be handed in. The second is a guest lecture and discussion by a senior manager from Microsoft Norway.

First part: IT economics

The relationship between information technology and economics – specifically productivity – is tricky. While most executives and all IT companies will agree that investing in information technology is a smart move, just how much you should invest and what the effect of the investment is is a bone of contention. We will explore these questions through analyzing some data from a well known IT practitioner magazine, and compare what they say with the academic literature. Key here is an analytical assignment which is to be handed in before class.

Read and be prepared to discuss:

  • Hitt, L., & Brynjolfsson, E. (1996). Productivity, Business Profitability, and Consumer Surplus: Three Different Measures of Information Technology Value. MIS Quarterly, 20(2), 121-142. (In Blackboard)
  • The InformationWEEK 500, InformationWEEK, September 1995. (This is for the assignment, and we will discuss this in detail. A tip for the analysis: Focus on the numbers, both those for each industry and those for  (or spreadsheet) to compare across industries. And do remember that the individual technologies discussed in the articles is rather old by now (not that technology optimism has changed in any way….)

Study questions:

  1. What are Hitt & Brynjolfsson’s three measures of information technology profitability — and their conclusions about them?
  2. How do you justify spending money on general technology, such as desktop computers and Internet bandwidth? How should you structure the spending?


(to be delivered into Blackboard no later than October 15, 2009, at 2000):
Answer the following question:

  • Imagine you are a CEO worrying about whether you are spending too much or not enough on information technology. How would the InformationWEEK 500 numbers help you?

For the analysis, here is an Excel worksheet with the numbers. Download the file to your own computer, then analyze it there using Excel or any other software you would want. Note that the numbers and stories are from 1995, so focus on the numbers rather than the technical discussion (though you might note that the language, attitudes and numbers are not very different from what they would be today.) Also note that I will apply the two page maximum limit ruthlessly – that means two pages, nothing more, anything more than that will not even be looked at.

image Second part: Microsoft’s view of the future – a discussion with Petter Merok.

Petter Merok is Director of technology and responsible for business development at Microsoft Norway,. He is also central participant in many ongoing discussions about the future of technology use and development in Norway. He will lead an informal discussion about how Microsoft sees the future – both in business and technology terms.

Please read and be ready to discuss:

  • Sherman, S. P. (1984). "Microsoft’s drive to dominate software." Fortune (January 23): 82-90. (this was assigned to the first class as well)
  • Andersen, E. (2004). Has the Microsoft of Today Become the IBM of the Late ’80s? Ubiquity, Volume 5, Issue 22. Gotta have one of my own in there…
  • Romano, B.J. (2008). "Gates’ big-picture memos", Seattle Times. Gives an idea about changes in strategy in Microsoft, over time.
  • Ray Ozzie, 2008: "Services Strategy Update". Another semi-internal memo giving important indications of Microsoft’s strategic direction.

(For a list of all the classes, see here.)