PLANNING INFORMATION TECHNOLOGY-KNOWLEDGE WORKER SYSTEMS

A model is introduced to examine the long-term planning associated wit h the purchase and implementation of information technologies (IT) tha t indirectly contribute to output through enhancement of an organizati on's knowledge workers. For example, architectural firms in the servic e industry and manufacturers developing new or modified products inves t in computer-aided design systems (CAD) to increase the volume of out put generated by the engineering specialist. A critical element of the IT-knowledge worker model introduced is the inclusion of implementati on-related dynamics. In particular we model bath the short-term disrup tion to output that typically occurs at the start of the implementatio n period and the effect of worker learning during implementation The a bility of the organization to generate output is examined in relation to the levels of workforce, information technology, worker skill, and a variety of features of the IT. Seven production function attributes are introduced to quantify the manner in which output is generated for the IT-knowledge worker system. The production function is embedded i nto an optimization model in which profit is maximized. The formulatio n is dynamic in order to capture important elements of the decision-ma king environment, including the learning process, technological change , increasing wages, and changes in the labor supply. Optimal policies are obtained depicting the manner in which an organization should hire and fire its workforce and acquire information technology over time. A fundamental result is obtained establishing the existence of a compl ementary relationship between IT and knowledge workers. It is shown th at a greater level of effective IT increases the desirability of hirin g additional workers. In addition, as the ability of the IT to enhance knowledge worker productivity improves (reflecting IT features such a s ease of use, functionality, connectivity, etc.), the desirability of hiring additional workers increases. Similarly, due to a high volume of workforce or a high level of worker skill, the desirability of acqu iring IT increases. It is also shown that if an organization ignores t he nature of the lagged effect of workforce learning, or if the impact of workforce learning on output is underestimated, then the projected volume of output over time is largely exaggerated. These results have important implications to management decision making with respect to effective implementation practices, technology choice issues, and work force selection. Numerical results are generated to explore the effect of organizational size. It is shown that a smaller organization (as m easured by the size of its workforce) relies more heavily on informati on technology to enhance worker productivity and generate output. Last ly, in response to higher wages, analytic results are derived demonstr ating that an organization should reduce its level of hiring and its p urchase of IT. Furthermore, numerical results show that an organizatio n paying higher wages should allocate a. greater amount of IT per work er to enhance productivity.