PROductivity From Information Technology (PROFIT)

The PROFIT Initiative is based at MIT's Sloan School of Management; its key objective is to study the use of information technology in both the private and public sectors to enhance productivity in many areas ranging from finance to transportation, and from manufacturing to telecommunications.

Research at MIT shows that the likelihood of success in utilizing information technology to increase productivity is a function of several technical and non-technical factors. To attain success, there are three prerequisites -- a careful determination of strategic applications, an intelligent selection of technologies, and an ability to incorporate appropriate changes in the organizational structure. The absence of even one of these factors will lead to failure.

In spite of all the technological advances that have occurred during this century, white collar workers still spend a large amount of their time retrieving information from various sources in order to perform their jobs. Some information resides on computers of different makes and types, some exists on paper and other traditional media, and some must be accessed through personal interactions. The overhead involved in managing and integrating these relevant pieces of information is a major barrier to
enhancing productivity.

One of the original objectives of PROFIT Initiative was to define new business processes required for gaining productivity from information technology. The consortium was also expected to develop key technologies for the support of these new business processes and make data a truly valuable corporate resource. It is increasing clear that business success through the use of information technology requires a careful and delicate interplay between the three components shown in Figure 1 that represent the basis for this Strategic Applications, Technology, and Organizational Research Initiative (SATORI: Webster definition: "a state of enlightenment").

Strategic Issues

The strategic uses of information technology include the identification ofnew business opportunities and the enhancement of value to the customer. The potential diversity of applications ranges from the ability to create just-in-time distribution networks (that can be tailored to respond to a sudden surge in demand) to the creation of new cross-product markets (e.g., a financial institution uses credit card information to encourage a buyer to increase their insurance after the purchase of new jewelry). The PROFIT Initiative has analyzed the creation of such opportunities and the development of systematic methodologies for monitoring enhancements in technology and the corresponding impacts on overall profits.

Organizational Issues

Information technology can enhance productivity only when the organizational structure is modified to benefit fully from the new
technology. Research shows that different organizational and sub organizational units possess dissimilar goals and strategies, and it is unrealistic to make the assumption that they will participate and cooperate to the extent necessary to attain success. This makes it necessary to identify the optimal set of roles and responsibilities of the key participants, along with a delineation of their rights, privileges, and liabilities in areas such as proprietary information and ownership of data. The PROFIT Initiative has analyzed the methodology of focused standards and other issues concerning the process of making controlled changes in complex organizational environments.

Technical Issues

Productivity from information technology requires improvements in the data gathering, quality analysis, integration, and aggregation stages.

Data Gather: A considerable cost and effort is incurred in many organizations to gather necessary data. New technologies provide opportunities to dramatically mitigate this problem. For example, the advent of new image-oriented techniques provide the ability to scan and interpret information directly from source inputs. A prototype application for reading amounts on bank checks, developed at MIT, shows the potential for dealing with the large set of data required by management, that does not currently reside on computer media (e.g., letters, memos, drawings, annual reports); a patent application is currently being processed by the U.S. patent office.

Data Quality: A parallel initiative on Total Data Quality Management (TDQM) methodology is looking at techniques required to analyze, measure and improve data quality. Results from TDQM are incorporated into the PROFIT Initiative, as appropriate, to mitigate the problems cause by erroneous and incomplete data.

Data Interpretation and Aggregation: The effective integration of information from disparate sources (e.g., dissimilar hardware, software, data syntax and semantics) to create new knowledge is a key area addressed by the PROFIT Initiative. The Composite Information System Tool Kit, an integration framework developed at MIT to demonstrate advanced techniques in connectivity and context knowledge interchange, has been enhanced. Further, techniques to move information from one environment (i.e., context) to another continue to be merged with existing data repository and warehouse technologies to provide productivity gains in large-scale operations.

PROFIT Initiative Membership

The original target of the PROFIT Initiative was to attain a research base of $950,000 per year by the end of 1995; this target was attained in July 1994. New organizations can still join PROFIT, provided they commit at least $95,000 per year, or $250,000 for a three-year period.

Charter Members are eligible to: (i) attend PROFIT seminars and symposia organized at MIT and elsewhere; (ii) serve as study or test sites for PROFIT research activities; (iii) receive the PROFIT Discussion Papers; (iv) utilize the knowledge gained from this program in their respective organizations; (v) have access to prototype software developed by the PROFIT research team; (vi) gain from valuable interactions with PROFIT research team members and other charter members of PROFIT; (vii) gain from interactions with members of the PROFIT Advisory Committee and directors of PROFIT.

The PROFIT Advisory Committee consists of:

  1. Dr. William F. Pounds, Professor and Former Dean;
  2. Dr. Arnoldo Hax, Alfred P. Sloan Professor and Former Deputy Dean
  3. Dr. Michael S. Scott-Morton, Jay W. Forrester Professor and Former Associate Dean;
  4. Dr. Thomas J. Allen, Gordon Y. Billard Fund Professor and Director of International Center for Research in Management of Technology; and
  5. Dr. Gabriel Bitran, Nippon Telegraph and Telephone Professor and Area Head for Management Science.

For more information, please contact any of the following directors of PROFIT:

Co-Directors:

Professor Stuart Madnick   Telephone(617) 253-6671   FAX (617) 253-3321
Dr. Amar Gupta   Telephone (617) 253-8906   FAX (617) 258-7579

Associate Director:

Dr. Michael Siegel   Telephone (617) 253-2937   FAX (617) 253-3321

 

Executive Summaries for PROFIT Working Paper Series