In recent decades, information technology has taken an ever-increasing prominence within the workplace. Investments in IT now dwarf investments in all other forms of capital, and more than 50% of all new employment is said to require at least basic IT skills.

Well-implemented IT projects can lead to drastic productivity improvements, whether it be through automation of systems, computer aided design, on-line marketing and research, or through a host of other applications which can help business, such as databases, statistical analysis or networking tools.  The spread of computing power has already drastically reduced costs for companies collecting, analysing, retrieving and re-using information.

In order to see the full productivity benefits of an IT project, major re-organisation may be required within a firm.  Remarkable productivity acceleration was seen in the USA during the 1990s, whereas Europe did not experience such drastic changes.  An important factor, it has been suggested, was the USA’s greater organisational capital, and the US firms’ ability to adapt with new technologies and get the most from them.  Costs may be incurred in the form of consultants’ fees, management time, training expenditure or recruitment costs, but the quality of implementation largely determines whether a project is a success or failure.

A major factor influencing the success of IT projects is the availability of staff with relevant IT skills.  A study has shown that UK bosses are divided on whether there is an IT skills gap or not, but most agree that there is a lack of people with the management and business skills to make IT projects truly effective.  Whilst staff with technical IT skills may be available, those with the necessary competences to enable convergence of the IT and business strategies are lacking.  This may explain why the UK and the North-East in particular, is failing to fully exploit the benefits of their technology.

Fact File

• A study from analyst IDC claimed that the UK could face a shortage of 40,000 IT networking specialists by 2008.  The UK is not alone – in one third of the 31 countries surveyed, demand for general IT skills could outstrip supply by more than 20% in 2008.

• Only 20% of employers in an IBS study claimed that ‘all employees possessed sufficient understanding of the ICTs available in the company to maximise the advantage that the technologies bring’.  A further 40% replied that ‘Yes, some’ employees fitted this description, and the remaining 40% simply answered ‘no’.

• Four out of ten recruiters quizzed as part of UK sector skills council, e-skills, UK's ICT Inquiry, said new graduates are lacking in business, non-technical and interpersonal skills.

• Manufacturing companies in the UK achieve an extra 2.2% in productivity for each additional 10% of employees using computers. In newer firms, this extra productivity effect rises to 4.4%.

• Manufacturing companies in the UK achieve an extra 2.9% in productivity for each additional 10% of employees using the Internet. Again, for newer firms the effect is larger.