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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/14124

Title: IT Driven Automation: The New Wave
Authors: Tuzhilin, Alex
Issue Date: Nov-2004
Publisher: Stern School of Business, New York University
Series/Report no.: CeDER-04-10
Abstract: There has been much discussion in the press about productivity improvements that grew at an annual rate of 3.55% from 2000 to 2003 [BW04]. One of the sources of this productivity growth is automation. We have all witnessed numerous ways in which companies have automated their business processes over the past decade. As a recent example, The Dallas Morning News reports in [Baj04] how Atmos Energy, the Dallas-based gas company, is automating its gas meter reading capabilities by using wireless technologies and thus reducing its staff by 225 employees over the next five years. In this article, we will examine current trends in the technology-driven automation and will argue that we are still in the early stages of a new wave of automation that will profoundly affect the economy and will significantly contribute to the productivity growth over the next 10 – 15 years. Industrial automation is an old phenomenon that goes back to the Industrial Revolution when machines replaced physical labor on a massive scale. Automation profoundly affected manufacturing over the past 25 years when industrial robots replaced various manual jobs in different spheres of manufacturing, including automobiles, computers and telecommunication equipment. More recently, automation was primarily driven by IT. For example, toll booth collectors recently became victims of IT-based automation when some of them lost their jobs to EZ-Pass technologies. Similarly, 225 employees at Atmos Energy will lose their jobs within the next 5 years due to the advancements in wireless technologies [Baj04]. Also, many cashiers in department stores and supermarkets will soon lose their jobs because of the advancements of the RFID tag technologies. Most of the jobs lost to automation have been routine production jobs, according to the job classification proposed by Robert Reich in [Rei91]. The main characteristics of these jobs are repetitiveness and structuredness since they have well defined procedural job descriptions. Examples of these jobs include assembly line workers, foremen, data processors, and toll collectors. The routine production jobs have been replaced by mechanical, electrical and IT-driven machines, including industrial robots and wireless communication devices. In this article, we claim that the next waive of automation will affect not only routine production workers, but also what Reich calls symbolic-analytic workers [Rei91], such as engineers, office and knowledge workers, managers, educators, and other groups of “mind workers.” Although few of these jobs will be eliminated completely, many of the more routine tasks in these jobs will be delegated to “smart machines” within the next 10 – 15 years, leading to major restructuring and consolidation of some of these jobs. This phenomenon is examined in the rest of this article.
URI: http://hdl.handle.net/2451/14124
Appears in Collections:CeDER Working Papers
IOMS: Information Systems Working Papers

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