New information technologies, often hailed as the key to corporate productivity, may cripple more companies than they help, a top executive at Xerox Corp. said today.
Speaking at the Information Industries Association meeting here, Paul Strassman, Xerox's director of information systems, released results from several studies indicating that companies that are not major players in their markets actually hurt profitability and lost market share when they phased in new computer technology.
Xerox, with $8.4 billion in annual sales, is a diversified financial services and technology company that is trying to market office automation systems.
"Weak companies can get worse with information technology," Strassman said, "probably because they are automating bad management habits."
One study, which examined 43 companies over a five-year span, showed that weaker companies that adopted new technologies were not only hurt but actually "came down very fast" in profitability as a result of their investment.
Another study of data processing practices of wholesalers found that heavy computer users in the industry actually had a lower return on assets than wholesalers who used no computers at all.
"The dogs among the computer users dragged everybody down," said Strassman, who argues that companies "have to improve their management fundamentals" before exploring automation as a strategic option.
He also argued that companies should analyze the role of new technology "from an organization perspective rather than an individual perspective," saying, in essence, that the rise of personal computers in corporations should be seen in the context of improving the company's productivity as well as the individual's productivity.
"We are putting a disproportionate amount of resources betting on information technology to improve productivity," he said.