Document(s) 4 of 17

The obvious starting point for this chapter is an accurate definition of ITs. However, this is a rather confusing issue because numerous typologies exist. Furthermore, the specific characteristics, or attributes, of ITs (see "Characteristics of IT Applications: Primary Versus Secondary Attributes") have to take into account the context, in particular the different countries and different economic sectors, where the rates of IT diffusion vary (see "Diffusion of IT Applications in Different Countries and Different Sectors of Economic Activity").

A measure for assessing the level of IT adoption will be proposed in "A Proposed Measurement for Assessing the Level of Adoption and the Rate of Diffusion of ITs."

Classification of ITs: points of convergence and divergence

Numerous IT typologies exist; they vary according to the point of view of the researchers and practitioners who formulated them.

Classification from a conceptual perspective

From a conceptual perspective, we will attempt to define broad categories of applications based on the role they play in organizations independently of their use in different functional areas. Often, when scanning the literature, one finds applications categorized as they relate to the groupings identified in Figure 1: on one hand, there are applications that support operations-type activities, such as transaction processing, process control, and office automation; on the other hand, we find traditional information reporting, decision-support, and executive information systems.

Figure 1. Classification of IT applications: a conceptual perspective. Source: O'Brien (1993).

One important assumption of this study was that it is increasingly difficult to dissociate IT applications that support production or operations-type activities from those that support more traditional managerial activities (Allen and Morton 1994).

Classification from a functional perspective

From a functional perspective, specific applications are not classified on the basis of broad types of information-processing activities (as identified in Figure 1) but are classified more in relation to the actual activities that must be carried out in the various functional areas of an organization. These applications are illustrated in Table 1.

The applications presented in Table 1 are usually found in large firms; in fact, some of them, such as the ones described in the category of human-resource management, would rarely apply in the context of smaller firms. However, because of the availability of easily accessible software packages, most of these applications, including the more sophisticated accounting applications, are becoming common in SMEs.

Classification from a technological perspective

The next perspective is the technological. The focus is on electronic data interchange (EDI), expert systems, and user computing systems or machines, regardless of the role they play in the organization or the specific activities they are used in. This technological focus will guide any IT-portfolio proposal and will further define the level of integration required among different technological applications. The issues of integration and interconnection are becoming increasingly important in most computer-based configurations, whether intrafirm or interfirm. To illustrate this perspective, let us consider a few examples.

Table 1. Classification of IT applications: a functional perspective.
Production and operations	Marketing	Finance	Accounting	Human-resource management
CAM MRP I Inventory control Purchasing and receiving Process control CAE Robotics	Market research Sales forecasting Advertising and promotion Sales-order processing Sales management Product management Marketing management	Capital budgeting Cash management Credit management Portfolio management Financial forecasting Financing-requirements analysis Financial-performance analysis	Billing and accounts receivable Payroll Accounts payable General ledger Fixed-asset accounting Cost accounting Tax accounting Budgeting Auditing	Personnel record-keeping Labour analysis Employee-skills inventory Compensation analysis Training and development analysis Personnel-requirements forecasting

Source: O'Brien (1990).
Note: CAE, computer-aided engineering; CAM, computer-aided manufacturing; MRP I, material-requirements planning.

The first example deals with an application that is becoming more and more common in manufacturing. The application uses computer-aided design (CAD) output to control machines used in manufacturing, that is, computer-aided manufacturing (CAM), and is referred to as CAD–CAM. Figure 2 illustrates computers being used in CAD–CAM from the design stages, where the parts, components, or products are actually designed and defined to precise specifications, right through to the actual machining instructions for the computerized numerically controlled (CNC) machine tools.

Figure2. CAD-CAM in a manufacturing setting. Source: O'Brien (1990).

The next example concerns EDI, which can be viewed as a three-party — the vendor (usually the supplier), the customer, and the buying and selling company (usually one large company) — electronic service (Figure 3) but still represents basically functional applications (billing, accounts receivable, and inventory management and control) supporting daily business operations.

Interfirm connections, such as those shown in Figure 3, are not only becoming more common today but are also becoming necessary for any firm that supplies the large companies that run on just-in-time (JIT) manufacturing cycles. These first-tier and second-tier suppliers, which are often SMEs, must be able to quickly provide parts and components for the larger manufacturer's inventory. This can only be done efficiently through IT networks, which monitor not only the flow of goods but also financial information regarding these goods or services.

Figure 3. Electronic data exchange as a third-party service. Source: Adapted from Burch (1989).

These are merely illustrations of how technological applications can be integrated in and between firms. However, they point to the importance of technology in supporting and enhancing a firm's operations and contributing to the competitiveness of its products and services.

Classification from a sectorial perspective

The fact that different authors use different typologies of IT applications is not merely due to different objectives but is also due to the effect of the industrial sector of activity. Table 2 presents some of the more current basic and advanced applications found in different industry segments. Overall, the table provides a good indication of the industry focus and, therefore, of what IT contributions are expected.

We have presented four different perspectives (conceptual, functional, technological, and sectorial) offering different ways of classifying IT applications.[1] However, to properly assess the level and rate of use of IT applications (see "A Proposed Measurement for Assessing the Level of Adoption and the Rate of Diffusion of ITs"), these perspectives should be combined.

Characteristics of IT applications: primary versus secondary attributes

It is clear that the nature of IT applications is difficult to grasp, and viewpoints sometimes seem contradictory and fragmentary. Such difficulties arise from our failure to make a distinction between primary and secondary attributes (or characteristics) of IT applications. Primary attributes relate to the object (IT application) and are independent of the subject (the organization), whereas secondary attributes vary according to the subject's perception of the object.

Secondary attributes are more likely than primary attributes to shed light on the adoption factors and impacts of IT applications. Let us consider an example. All IT applications share a common primary attribute for all types of organizations in all industries: they are all computer-based applications. However, some of these applications may be considered either radical or incremental, depending on the organizational and industrial contexts. In a small firm, a specific IT application may be seen as radical because it requires a large portion of the available financial resources and heavy involvement on the part of qualified technical employees and implies major organizational changes. However, the same application may be considered incremental in a large firm.

Table 2. Information-systems applications by industry category.
Industry segment	Basic applications	Advanced applications
Manufacturing	Production accounting Production planning Purchasing and receiving Process control Inventory control	CAM CAE Process control Inventory control Numerical control Robotics
Business and personal services	Service-bureau functions Tax preparation Accounting Client records	Econometric models Time-sharing Engineering analysis Financial planning
Banking and finance	Demand deposit accounting Cheque processing Proof and transit operations Cost accounting	On-line savings Electronic funds transfer Portfolio analysis Cash-flow analysis
Insurance	Premium accounting Customer billing External reports Reserve calculation	Actuarial analysis Investment analysis Policy approval Cash-flow analysis
Utilities	Customer billing Accounting Meter reading Inventory control	Rate analysis Line and generator loading Operational simulation Financial models
Distribution	Order processing Inventory control Purchasing Warehouse control	Vehicle scheduling EDI Forecasting Store-site selection
Transportation	Rate calculation Vehicle maintenance Cost analysis Accounting	Traffic-pattern analysis Automatic rating Tariff analysis Reservation systems
Health care	Patient billing Inventory accounting Health-care statistics Patient history	Lab–operation scheduling Nurses' station automation Patient monitoring Computerized diagnostics
Retailing	Customer billing Sales analysis Accounting Inventory reporting	Point-of-sale systems Sales forecasting Merchandising EDI
Printing and publishing	Circulation Classified ads Accounting Payroll	Automated typesetting Desktop publishing Media analysis Page layout

Source: O'Brien (1990).
Note: CAE, computer-aided engineering; CAM, computer-aided manufacturing; EDI, electronic data interchange.

The same line of reasoning applies to the size of the firm, to the industrial sector (some sectors are more technologically sophisticated than others), and to country-specific contextual factors (such as the presence of a more appropriate national technological infrastructure). Differences between small and large firms, industries, and countries exist, as illustrated in the next section.

Diffusion of IT applications in different countries and different sectors of economic activity

This section will present the actual use of some IT applications in different countries[2] and, in specific countries, their rate of diffusion. We will also examine the rate of penetration in different sectors of activity and then take a closer look at SMEs.

Use of IT applications in different countries

The need for detailed, comparable, and up-to-date information about the rate of diffusion of IT applications in different countries is strong but still remains partially unmet, although OECD has made many efforts to promote international comparability in technology use (see, for example, OECD 1990, 1992). The most comprehensive effort to gather and summarize this information was made by Northcott and Vickery (1993). They extensively reviewed all surveys done in OECD countries since 1980 and tried to analyze the overlap between the various issues covered in these national surveys (Table 3).

As shown in Table 3, the overlap among the surveys carried out in 13 countries is greatest for the use of computer-based advanced manufacturing technologies (AMTs), which results in the internationally comparable data[3] presented in Table 4.

Table 3. Issues covered by surveys on microelectronics and advanced-technology in OECD countries
	Australia	Austria	Canada	Denmark	Finland
Use in products
Actual		X		X	X
Planned		X		X	X
Use in manufacturing processes
Actual	X	X	X	X	X
Planned	X	X	X	X	X
Technology source	X	X		X	X
Motives for nonuse		X	X		X
CAD	X	X	X	X	X
CNC	X	X	X	X	X
Robots	X	X	X	X	X
FMS	X	X	X	X	X
CAM	X	X	X	X
Inspection & testing	X	X	X	X	X
AS–RS	X	X	X	X	X
Communication and control	X	X	X	X	X
Motives for use
In products					X
In processes	X	X		X	X
Competencies and impacts
Number of engineers				X	X
Training programs	X	X	X	X	X
Impact on employment		X			X
Level of investment	X
Government support			X
Problems for use
In products					X
In processes		X		X	X

	France	Germany	Japan	Netherlands	New Zealand	Sweden	UK	USA
Use in products
Actual	X	X		X	X	X	X
Planned	X	X		X	X	X	X
Use in manufacturing processes
Actual	X	X	X	X	X	X	X	X
Planned	X	X	X	X	X	X	X	X
Technology source	X	X					X	X
Motives for nonuse						X	X	X
CAD	X	X		X	X	X	X	X
CNC	X	X	X	X	X	X	X	X
Robots	X	X	X	X	X	X	X	X
FMS			X		X	X		X
CAM				X		X		X
Inspection & testing	X	X	X	X	X	X		X
AS–RS	X	X		X	X	X	X	X
Communication and control	X	X	X	X	X	X	X	X
Motives for use
In products	X			X			X	X
In processes					X		X	X
Competencies and impacts
Number of engineers	X	X		X	X	X	X	X
Training programs	X	X				X	X
Impact on employment	X	X		X			X
Level of investment				X
Government support						X	X
Problems for use
In products	X	X	X		X	X	X	X
In processes	X	X			X	X	X

Source: Northcott and Vickery (1993).
Note: AS–RS, automated storage and retrieval systems; CAD, computer-aided design; CAM, computer-aided manufacturing; CNC, computerized numerically controlled (machines); FMS, flexible manufacturing systems.

Table 4. Use of advanced manufacturing technologies in OECD countries by firm size.
Computer-based production technologies	Use by country (%)
	Australia (1988)		Canada (1989)		Japan (1988)		Sweden (1986)		UK (1987)		USA (1988)
	10–199	>=200	20–99	>=500	<300	>=300	5–19	>=500	1–199	>=200	20–499	>=500
	CAD–CAE	8.3	39.0	27.0	75.0	39.1	75.2	7.7	57.7	5.6	42.0	36.3	82.6
NC–CNC machines	11.8	34.8	21.0	65.0	57.4	79.4	—	—	6.2	33.0	39.6	69.8
FMC–FMS	0.9	5.1	7.0	31.0	39.4	67.4	—	—	—	—	9.1	35.9
Pick-and-place robots	1.5	14.7	3.0	30.0	22.6	62.2	—	—	1.4	15.0	5.5	43.3
Assembling robots	0.3	4.3	—	—	8.3	41.4	—	—	0.5	0.9	3.9	35.0
AGVS	0.5	2.7	2.0	12.0	—	—	—	—	—	—	0.8	13.1
AS–RS	1.3	11.7	1.0	11.0	10.9	44.9	1.6	26.7	—	—	1.9	24.4

Source: Northcott and Vickery (1993).
Note: AGVS, automated guided-vehicle systems; CAD, computer-assisted design; CAE, computer-assisted engineering; CNC, computerized numerically controlled; FMC, flexible manufacturing cell; FMS, flexible manufacturing systems; NC, numerically controlled.

Table 4 indicates that in the late 1980s Japan had a clear lead in robots, flexible manufacturing systems (FMS), and automated storage and retrieval systems (AS–RS). The United States and Canada seemed to lag behind Japan in all technologies except computer-aided design and engineering (CAD–CAE) and numerically controlled (NC) machines. In all countries, the use of these advanced technologies was much lower in SMEs than in their larger counterparts. The data shown in Table 4 should be interpreted cautiously because the surveys were not carried out at the same time (1986–89) and because the firms' sizes differed from country to country. More recently, Japan's lead in industrial-robot use was again confirmed (Figure 4).

Figure 4. Worldwide rise of robots (industrial robots in use). Source: United Nations, in The Economist (March 1994).

Rate of diffusion of IT applications in specific countries

Longitudinal surveys are necessary to assess the rate of diffusion. The most comprehensive survey carried out between two points in time was certainly the one published in February 1995 by Statistics Canada (1995).

Table 5 shows the advances in technology use in Canadian manufacturing firms between 1989 and 1993. The highest growth rates were for CAD–CAE (19%) and the use of local-area networks (LANs) for technical data (14%). Automated handling systems (AS–RS and automated guided-vehicle systems [AGVS]) and most applications related to manufacturing and assembly had the lowest growth rates in Canadian manufacturing firms. Were these rates of penetration similar in other countries?

Table 5. Growth in technology use between 1989 and 1993 (shipment weighted) for Canadian manufacturing firms.
Computer-based production applications	Use (% of shipments)			Change (%)
	1989 survey		1993 survey (modified)
	In 1989	Projected
Design and engineering
CAD–CAE	49	58	68	19
CAD–CAM	20	26	24	4
Digital representation of CAD output used in procurement activities	13	20	20	7
Fabrication and assembly
FMC–FMS	21	25	23	2
NC–CNC machines	30	32	31	1
Materials-working lasers	9	15	9	0
Pick-and-place robots	15	18	23	8
Other robots	16	19	15	-1
Automated handling systems
AS–RS	15	23	15	0
AGVS	9	17	10	1
Inspection and communications
Automated inspection equipment for inputs	31	39	38	7
Automated inspection equipment for final products	35	42	46	11
LAN for technical data	41	53	55	14
LAN for factory use	37	49	46	9
Intercompany computer network	35	47	39	4
Programable controllers	64	66	68	4
Computers used for control in factories	50	58	62	12
Manufacturing information systems
MRP I	49	30	59	10
MRP II	33	48	42	9
Integration and control
CIM	21	29	29	8
SCADA	34	43	43	9
Artificial intelligence– expert systems	7	20	12	5

Source: Statistics Canada (1995).
Note: AGVS, automated guided-vehicle systems; AS–RS, automated storage and retrieval systems; CAD, computer-aided design; CAD–CAM, CAD output used to control manufacturing machines; CAE, computer-aided engineering; CAM, computer-aided manufacturing; CIM, computer-integrated manufacturing; CNC, computerized numerically controlled; FMC, flexible manufacturing cell; FMS, flexible manufacturing systems; LAN, local-area network; MRP I, material-requirements planning; MRP II, manufacturing-resource planning; NC, numerically controlled; SCADA, supervisory control and data acquisition.

The longitudinal survey carried out by Swamidass (1994) and published by the National Association of Manufacturers (United States) provided partial answers to that question. Swamidass introduced a fundamental distinction not found in the national surveys: the use of a particular application as such is not enough if we do not take into account the existing level of skills related to that application in each firm. Swamidass suggested that there are three types of users: highly skilled users, moderately skilled users, and users with some skills (Figure 5). In fact, as was the case for Canadian firms, CAD was the most widely used application, but only one-third of US manufacturing firms were highly skilled in its use. Although CNC was less frequently used, the percentage of skilled users of CNC was similar to that for CAD. In general, the levels of highly skilled use were fairly low for JIT, computer-integrated manufacturing (CIM), manufacturing-resource planning (MRP II), automated inspection, robots, FMS, and AGVs.

Figure 5. Technology use in US plants by skill level. Source: Swamidass (1994).

Note: AGV, automated guided vehicle; CAD, computer-aided design; CAM, computer-aided manufacturing; CIM, computer-integrated manufacturing; CNC, computerized numerically controlled (machines); FMS, flexible manufacturing systems; JIT, just in time; LAN, local-area network; MRP I, material- requirements planning; MRP II, manufacturing-resource planning; SQC, statistical quality control; TQM, total quality management.

Plans to become highly skilled in technology use appeared to have changed between 1990 and 1994 among US manufacturers. Table 6 indicates that CAD and JIT were the most frequently emphasized in 1990, but in 1994, JIT moved ahead of CAD. The last column of Table 6 is quite interesting because it shows the shift in US manufacturers' interest: flexible manufacturing cells (FMCs) showed the largest rise in interest, whereas CAD showed a definite decline in interest, probably as a result of the near saturation in its use.

Table 6. Changes in plans to become highly skilled technology users in US manufacturing firms (among participants in both studies).
Technology	Second study (%)	First study (%)	Second–first difference (%)
FMC	39.3	32.2	+7.1
SQC	33.7	28.6	+5.1
JIT	48.6	43.6	+5.0
FMS	12.5	9.1	+3.4
MRP I	21.7	21.3	+0.4
CAD	45.3	50.9	-5.6
Robots	8.3	14.0	-5.7
MRP II	20.3	29.6	-9.3
CAM	30.0	39.4	-9.4

Source: Swamidass (1994).
Note: CAD, computer-aided design; CAM, computer-aided manufacturing; FMC, flexible manufacturing cell; FMS, flexible manufacturing systems; JIT, just in time; MRP I, material-requirements planning; MRP II, manufacturing-resource planning; SQC, statistical quality control.

Use of IT applications in specific sectors

In 1995, the use of IT applications was found to vary from industry to industry. Table 7 shows that three industries — electrical and electronic products, primary metals, and transportation equipment — were the chief adopters of computer-based production applications in Canada (Statistics Canada 1995), whereas lumber, rubber and plastics, textiles and clothing, and furniture and fixtures showed the lowest penetration rates. The industries of particular interest to this study are indicated. If we look at firms using at least one technology, we find that the same industries as those shown in Table 7 were leaders and laggards (Figure 6).

Table 7. Functional technology use by industry (shipment weighted).
	Use (% of shipments)
Industry	Design and engineering	Fabrication and assembly	Automated materials handling	Inspection and communications	Manufacturing information systems	Integration and control
Electrical and electronic productsa	86.4	77.4	52.7	84.8	78.3	61.6
Primary metalsa	90.3	70.6	12.2	91.8	70.6	64.1
Transportation equipmenta	74.8	77.1	10.7	89.4	69.4	45.5
Paper and allied products	76.0	30.4	28.9	79.5	26.5	38.5
Petroleum and chemical productsa	66.8	24.7	7.9	80.6	65.1	62.5
Other manufacturing industries	69.9	64.6	6.3	70.0	55.6	31.5
Machinerya	75.1	64.7	11.9	61.4	43.4	24.2
Food processinga	48.1	26.1	17.5	70.0	53.5	31.6
Nonmetallic mineral productsa	25.7	45.2	31.9	58.6	38.5	44.0
Fabricated metal productsa	44.5	33.6	0.5	30.5	26.3	4.2
Lumbera	37.1	34.9	9.8	55.6	6.9	21.3
Rubber and plasticsa	37.7	34.9	9.7	48.9	26.6	16.4
Textiles and clothinga	44.6	26.3	14.5	45.0	23.1	34.4
Furniture and fixturesa	44.1	39.7	2.4	25.4	37.5	13.6
Printing and publishing	31.3	16.2	4.3	50.9	23.5	21.2

Source: Statistics Canada (1995).
^aIndustries of particular interest to this study.

Figure 6. Adoption rates of advanced technologies by industry in Canada (percentage of firms using at least one technology). Source: Statistics Canada (1995).

The services sector does not seem to attract the same attention from national agencies as the manufacturing sector. The notable exception was a report by the Economic Council of Canada (McFetridge 1992).

The use of ITs in the services sector is presented in Table 8. Personal computers and facsimile machines were in 1992 the most widely used, with close to 90% of establishments using this equipment. Some office networking applications, such as voice mail or video conferencing, were not adopted to any great extent.

According to the same study (McFetridge 1992), the following specific service sectors showed the highest adoption rates:

• Communications industry;
• Wholesale trade;
• Finance and insurance industry; and
• Business-service industries.

The lowest rates of adoption (McFetridge 1992) were found in the following sectors:

• Accommodation industry;
• Food and beverage industry; and
• Retail trade.

Table 8. Services-sector establishments using or planning to use selected technologies in Canada.
Technology	Using (%)	Planning to use within 3 years (%)
Office automation
Personal computers	89	3
On-line terminals	76	4
Minicomputers	54	4
Mainframe computers	41	2
Office networking
Facsimile	89	3
LAN	40	17
Telex	36	0
Electronic mail (private)	30	14
WAN	29	10
External databases	22	8
Mobile data communications	11	5
Electronic mail (public)	10	9
Voice mail	6	7
Satellite data distribution	3	5
Video conferencing	2	5
Design support systems
DTP	30	15
CAD	14	5
CAE	6	4
CASE	6	8
Inventory–sales systems
Computerized inventory control	56	12
Computerized order entry	50	9
Point-of-sale terminals	22	8
EDI	19	16
Electronic scanning systems	15	14
Automated retrieval systems	10	4

Source: McFetridge (1992).
Note: CAD, computer-aided design; CAE, computer-aided engineering; CASE, computer-aided software engineering; DTP, desktop publishing; EDI, electronic data interchange; LAN, local-area network; WAN, wide-area network.

Some IT applications, such as transportation systems, computerized reservation systems, and property-management systems, were industry specific in 1990; this is illustrated in Figure 7.

Figure 7. Industry-specific IT applications in the Canadian services sector. Source: Industry, Science and Technology Canada (1990).

Logically enough, transportation systems, such as fleet-management and freight-analysis systems, were found primarily in the transportation industry and to a much lesser extent in the wholesale-trade sector (Figure 7). Computerized reservation systems were most widely used by hotels and restaurants (accommodation and food industry), whereas property-management systems were mostly adopted by real-estate operators.

Rate of diffusion of IT applications in SMEs

All national surveys pointed to the same phenomenon: larger establishments were making greater use of IT applications in both the manufacturing sector and the services sector.

The recent survey carried out by Statistics Canada (1995) demonstrated a constant progression in the use of ITs from artisanal firms (0–19 employees), to small firms (20–99 employees), to medium-sized firms (100–499 employees), to large firms (>=500 employees), both in the case of broad functional advanced-manufacturing application (Table 9) and in the case of each specific manufacturing application (Table 10).

Table 9. Functional technology use by employment size (shipment weighted) for Canadian manufacturing firms.
Technology	Number of employees
	0–19	20–99	100–499	>=500
	Use (% of shipments)
Design and engineering	30.7	39.2	57.7	81.8
Fabrication and assembly	19.6	19.6	37.0	67.4
Automated materials handling	8.9	4.4	12.3	17.5
Inspection and communications	34.9	41.2	73.3	93.7
Manufacturing information systems	22.3	25.1	40.9	81.5
Integration and control	23.3	22.3	34.2	56.4

Source: Statistics Canada (1995).

Table 10. Advanced technology use in 1993 by employment size (shipment weighted) for Canadian manufacturing firms.
Technology	Number of employees
	0–19	20–99	100–499	>=500
	Use (% of shipments)
Design and engineering
CAD–CAE	28.0	35.8	55.8	81.2
CAD–CAM	8.7	10.9	132	27.6
Digital representation of CAD output used in procurement activities	5.1	6.0	12.2	22.4
Fabrication and assembly
FMC–FMS	7.4	6.9	11.9	28.1
NC–CNC machines	14.1	13.1	21.4	35.8
Materials-working lasers	1.2	2.7	3.7	16.1
Pick-and-place robots	2.2	2.4	12.7	32.3
Other robots	2.3	2.6	10.6	27.9
Automated handling systems
AS–RS	7.5	1.3	11.1	12.8
AGVS	4.6	0.6	3.0	8.5
Inspection and communications
Automated inspection equipment for inputs	15.6	8.1	15.1	45.3
Automated inspection equipment for final products	16.5	11.9	29.4	59.2
LAN for technical data	22.4	16.0	39.2	71.1
LAN for factory use	22.8	11.8	34.4	57.4
Intercompany computer network	11.6	707	23.8	54.6
Programable controllers	22.5	22.6	57.0	78.3
Computers used for control in factories	24.4	24.4	49.3	71.0
Manufacturing information systems
MRP I	22.1	23.1	39.2	73.8
MRP II	15.7	14.5	21.6	58.6
Integration and control
CIM	16.0	15.7	14.8	29.8
SCADA	17.7	15.7	30.7	4.2
Artificial intelligence–expert systems	1.0	0.6	8.4	16.7

Source: Statistics Canada (1995).
Note: AGVS, automated guided-vehicle systems; AS–RS, automated storage and retrieval systems; CAD, computer-aided design; CAD–CAM, CAD output used to control manufacturing machines; CAE, computer-aided engineering; CAM, computer-aided manufacturing; CIM, computer-integrated manufacturing; CNC, computerized numerically controlled; FMC, flexible manufacturing cell; FMS, flexible manufacturing systems; LAN, local-area network; MRP I, material-requirements planning; MRP II, manufacturing-resource planning; NC, numerically controlled; SCADA, supervisory control and data acquisition.Not surprisingly, Swamidass (1994) found that AMTs (Figure 8) were more common in large US plants (with more than 100 employees) than in small plants (with fewer than 100 employees). In the case of some technologies (for example, FMS or AGVS), the percentage of large plants using these technologies was much greater than that of small plants. In the case of CAD, small plants were catching up with their larger counterparts (75.5% versus 94.8%). Affordability and internal expertise and know-how no doubt explained these differences.

Figure 8. Technology use in small and large US plants. Source: Swamidass (1994).

Note: AGV, automated guided vehicle; CAD, computer-aided design; CAM, computer-aided manufacturing; CIM, computer-integrated manufacturing; CNC, computerized numerically controlled (machines); FMS, flexible manufacturing systems; JIT, just in time; LAN, local-area network; MRP I, material-requirements planning; MRP II, manufacturing-resource planning; SQC, statistical quality control; TQM, total quality management.

In the services sector, large organizations (with more than 200 employees) also made greater use of ITs in 1990 (Figure 9).

Figure 9. Technology use in the services sector by small and large Canadian firms. Source: Industry, Science and Technology Canada (1990).

Although IT applications were in 1994 more often present in large firms, small businesses were increasingly turning to state-of-the-art ITs, and the vast majority of small firms surveyed considered these technologies a critical or important factor (Figure 10). Improvements in computer hardware and software, along with falling prices, placed these IT applications within the grasp of more and more small firms.

Figure 10. Importance of ITs in small US firms. Source: Business Week (1994).

Which applications were the most valued? Small US firms favoured the following in decreasing order: payroll, tax, and booking; order entry and billing; financial analysis–cash management; and sales information (Table 11). Distribution and logistics systems and manufacturing systems were the least-adopted IT applications among small firms but were still present in almost one out of five.

There is no doubt that ITs can now reach firms of every size and in every sector of the economy.

Table 11. Computer-based applications in small US firms.
	Use (%)
Most-valued systems
Payroll, tax, and booking	74
Order entry and billing	65
Financial analysis–cash management	54
Sales information	52
Least-valued systems
Inventory control	36
Customer service	22
Distribution and logistics	17
Manufacturing	16

Source: Business Week (1994).

A proposed measurement for assessing the level of adoption and the rate of diffusion of ITs

We propose that the concept of IT be defined in terms of specific applications. Therefore, microcomputers or microprocessors integrated in the products and services offered by a particular firm will be excluded. For example, "smart" products, such as credit cards with chips or automobiles with microcomputers, will not be considered. This also suggests that the focus must be on the adoption of computer-based applications, such as inventory management, rather than on the possession of a microcomputer.

The concept of IT should also include both intrafirm and extrafirm applications:[4] the fusion of computers, information systems, and telecommunications is a fact, and applications like EDI should therefore be included.

The proposed list of applications (Table 12) was derived from the list first established by Statistics Canada (1989), which was tested extensively in the specific context of small manufacturing firms (Lefebvre and Lefebvre 1992). This allowed us to eliminate many of the applications that do not apply to smaller firms that because of their size do not require such applications in the first place or cannot handle their technical sophistication. Note that some of these applications can only be found in very specialized manufacturing firms operating in industrial environments where product specifications and requirements are strict and well defined (for example, the electronics or aeronautics industries).

Table 12. List of IT applications.
Computer-based administrative applicationsa	Computer-based production applicationsb	Computers used for control in factories
Accounts payable–accounts receivable Inventory management and control Sales analysis Payroll Billing Cost accounting Operations management and production scheduling Word processing Electronic mail–electronic filing Teleconferencing–video conferencing Expert systems EDI with customers EDI with suppliers	Design and engineering CAD and CAE CAD–CAM Digital representation of CAD output for procurement activities Fabrication and assembly FMC or FMS NC and CNC machines Materials-working lasers Pick-and-place robots Other robots Automated materials handling AS–RS AGVS Inspection and communications Automated inspection equipment for inputs Automated inspection equipment for final products LAN for technical data LAN for factory use Intercompany computer network Programable controllers	Manufacturing information systems MRP I MRP II Integration and control CIM SCADA Artificial intelligence–expert systems

Note: AGVS, automated guided-vehicle systems; AS–RS, automated storage and retrieval systems; CAD, computer-aided design; CAD–CAM, CAD output used to control manufacturing machines; CAE, computer-aided engineering; CAM, computer-aided manufacturing; CIM, computer-integrated manufacturing; CNC, computerized numerically controlled; FMC, flexible manufacturing cell; FMS, flexible manufacturing systems; LAN, local area network; MRP I, materials-requirements planning; MRP II, manufacturing-resource planning; NC, numerically controlled; SCADA, supervisory control and data acquisition.
^aExtensively used in several studies (for example, Lefebvre and Lefebvre 1992).
^bAdapted from a typology produced by Statistics Canada (1995). Definitions are offered in Appendix B.

The list of applications devised by Statistics Canada (1989) is very well known and can easily be compared with those derived from the United States and Australia (Ducharme and Gault 1992). The list is also similar in many respects to the one used by Swamidass (1994). These other lists of applications exclude computer-based administrative applications, but we strongly believe that administrative applications should be included because they are crucial in both the services and the manufacturing sectors.

Moreover, in manufacturing firms, computer-based administrative and production applications are developed simultaneously, and synergistic effects are observed between the two types of application. It is therefore impossible to dissociate these two types of applications when trying to determine the relative influence of various adoption factors or to assess their impact. Applications such as CAD–CAM, computer-aided engineering (CAE), material-requirements planning (MRP I), MRP II, and FMS should be included because they all rely on information systems. Some authors have indeed stressed the importance of cross-functional information systems as an effective and efficient way to attain strategic objectives (Moad 1989; Wilder 1989), but this integration is difficult to achieve for most firms. From a practical point of view, sharing databases is still considered by chief executive officers (CEOs) a crucial issue facing organizations, although data sharing across application systems and departments is at the heart of cross-functional information systems. Going one step further, the integration of computer-based administrative applications and AMTs certainly results in numerous managerial complexities that seem to be much greater than the technical complexities, mainly because of the split between administrative employees (marketing, sales, accounting, or finance) and production employees (engineers, production managers, machinists, technicians, or specialized blue-collar workers).

Such integration is therefore complex, but this by no means precludes synergy between these technologies; this is true for two compelling reasons. First, AMTs are considered the "manufacturing subset of information technology," and FMS are considered one of the "most important industrial applications of information technology" (Mansfield 1993). Although traditional manufacturing systems use paper-based information systems, the AMTs both thrive and depend on highly sophisticated IT.

Second, as AMTs become more and more integrated — moving from hybrid cell to assembly cell, to machining cell, to FMS, and finally to CIM — more and more interdepencies are created and higher levels of integration of ITs are required (Gerwin and Kolodny 1992). CIM implies the integration of production with engineering and business functions (Hsu and Skevington 1987; Thacker 1989), and thus a logical consequence is the integration of computer-based administrative applications and AMTs. We therefore argue that these two broad types of technologies cannot be dissociated, even in small firms where such integration is just starting.

Proposed measurement of the level of adoption of IT applications

The level of IT adoption is a composite measure that takes into account the number of applications adopted by a firm and a weighting attributed by a panel of experts, who rank each application according to its degree of radicalness– innovativeness[5] (see "Characteristics of IT Applications: Primary Versus Secondary Attributes"). The experts chosen must have considerable expertise in ITs and must also be very familiar with the context in which the firms operate.

This proposed measurement will allow an adequate comparison from country to country and from firm to firm and result in a score that is simply calculated, as follows (Lefebvre and Lefebvre 1992):

where i_j = 0 or 1, depending on the adoption of innovation j; and r_j is the degree of radicalness of innovation j as established by a panel of experts who ranked each innovation on seven-point Likert scales.

To assess the degree of penetration of IT applications, it is possible to estimate the percentages of employees who are highly skilled users, moderately skilled users, and users with some skills in each application.

Finally, one can attempt to determine the level of integration between these applications, which is rather difficult and requires on-site observations.

Proposed measurement of the rate of diffusion of IT applications

In the case of longitudinal studies (that is, assessing the level of adoption of IT at two different points in time), the rate of diffusion of these technologies can be easily estimated. When longitudinal studies are excluded, it will still be possible to estimate the rate of diffusion by simply asking about the use planned in 2 or 3 years. This will be a rough estimate because some plans may never be realized, but it will still provide some indication.

The advantages of the two proposed measurements are numerous: they can act as a benchmark among firms, industries, and countries; they have been extensively pretested in large and small firms; and they are simple and repeatable. Because the adoption of IT applications is context specific, some applications may be removed from the list presented in Table 12, or some industry-specific applications, such as the ones shown in Table 2, can be added. The proposed measurement is therefore easily adaptable to different contexts.

[1] Other classifications exist: for example, the classical distinction between hard and soft technologies made by Swamidass (1994) and presented in Appendix A is interesting because the difficulties and impacts of adopting and implementing soft technologies are often underestimated.

[2] The rate of penetration of ITs in different countries can be assessed by the level of IT investments expressed as a percentage of gross domestic product (GDP), which is a rather rough proxy. Small countries (having fewer than 10 million people) do invest in ITs: 2.7% of GDP for New Zealand; 2.2%, for Singapore; 1.5%, for Denmark, Hong Kong, and Norway; 1.3%, for Sweden; 1.1%, for Finland; and 2.8%, for the United States (Dedrick et al. 1995).

[3] Three surveys — the 1988 survey by the US Bureau of Census (1989), the second Canadian survey by Statistics Canada (1989), and the 1988 Australian survey by the Australian Bureau of Statistics (ABS 1989, 1990) — were the most extensive because they share data on the use and planned use of 17 technologies. The Australian survey included advanced cutting technologies, apart from lasers and different types of robots (pick-and-place robots, arc-welding and spot-welding robots, and those used for assembly or finishing).

[4] These include networking applications in the firm (for example, the use of a LAN for technical data) and between firms (for example, EDI with customers or suppliers).

[5] The degree of radicalness differs for different organizational contexts (that is, larger versus smaller SMEs) and for different industrial contexts (that is, specific sectors of activity).

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