Research Project - Reengineering

Research Project - Reengineering - Reengineering by Paul A....

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Reengineering by Paul A. Strassmann excerpted from The Politics of Information Management The Information Economics Press, 1995 Early in 1993, an epochal event took place in the US. For the first time in history, "white-collar" unemployment exceeded "blue- collar" unemployment. In the experience of older generations, a college education entitles one to a job with an excellent earning potential, long-term job security and opportunity to climb a career ladder. If there was an economic downturn, unemployment was something that happened to others. Large-scale white collar unemployment should not have come as a surprise. Since 1979, the US. information workforce has kept climbing and in 1993 stood at 54% of total employment. Forty million new information workers had appeared since 1960. What do these people do? They are very busy and end up as either as corporate or social overhead if they work in the public sector. They are lawyers, consultants, coordinators, clerks, administrators, managers, executives and experts of all sorts. The expansion in computer-related occupations greatly increased the amount of information that these people could process and therefore demand from others. It is the characteristics of information work that it breeds additional information work at a faster rate than number of people added to the information payroll. Computers turned out to be greater multipliers of work than any other machine ever invented. However, the greatest growth has been in government which now employs more people than the manufacturing sector. Government workers predominantly are engaged in passing information and redistributing money which requires compliance with complex regulations. Who pays for this growth in overhead? Everybody does either in higher prices or as increased taxes. As long as US. firms could raise prices, there was always room for more overhead. When international economic competition started cutting into market share starting in the 1980s corporations had to reduce staff costs. Blue collar labor essential to manufacture goods was either outsourced to foreign lands, or automated, using proven industrial engineering methods to substitute capital for labor. By the mid 1980s major cost cuts could come only from reductions in overhead. Overhead Cost Reduction Early attempts announcing 20% or more across-the board layoffs in major corporations misfired. The most valuable experts left first to start up business ventures, most often with the knowledge they gained while the large firms lingered in bringing innovations into the marketplace. Much of the dynamic growth of the Silicon Valley and of the complexes surrounding Boston have their origins in the entrepreneurial exploitation of huge research and development investments of large corporations. The next wave was even more wasteful, because overhead was reduced by imposing cost cutting targets without the benefit of
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This note was uploaded on 03/26/2012 for the course IS535 IS535 taught by Professor Professor during the Spring '09 term at Keller Graduate School of Management.

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Research Project - Reengineering - Reengineering by Paul A....

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