The process of economic evolution from agriculture to manufacturing to services is nearing its end in the U.S. and other developed economies. Another major evolution along a different dimension is now underway: it is from a material-based economy to an information-based economy. In the past, the product–service dichotomy has proved useful as an organizing principle for the study of operations management. Today, however, a material–information categorization of products and services appears to be equally important and useful. The information sector now comprises the major share of the U.S. private economy and includes many of the largest industrial sectors and firms. We discuss the implications of this evolution for research and teaching in operations management (OM).
The basic questions addressed here are: In what ways are information products, services, processes and chains similar to, or different from, those in the material world? To what extent is it possible to manage operations in information industries using the existing operations management concepts and techniques? The conclusions are mixed. To a great extent, traditional concepts are indeed applicable and useful. However, there are significant differences. For example, quantification and measurement pose a fundamental problem in the study of information industries. As a result, there are difficulties in analyzing some of the most basic OM issues related to productivity, cost, value, and transformation. Nevertheless, the process-centric methods of operations management can be quite effective in analyzing firms and industries that produce information goods and services. An understanding of process economics and information chains is also central to the analysis of competition given the impact of new technologies on processes, firms, information chains and information industries. We conclude that while there is much in the information sector that can be addressed with our current toolkit, some very interesting and challenging issues still remain open for research. From the perspective of management education too, operations management in the information economy is an area of growing importance, with some easy wins and some significant challenges.
As long as there has been organized commercial activity of any kind, there have always been “operations” to be managed. But the modern academic field of operations management (OM) can trace its roots to the scientific management and work-study techniques of Taylor (1911) and Gilbreth, 1911 and Gilbreth, 1912, the lot-sizing models of Harris (1913) and Camp (1922), and the shop floor models of Gantt (1916). In the service sector, the queuing analyses developed in telephony by Erlang (1909) and Palm (1957) have proved to be seminal in modeling many service contexts. Of course, the fundamental concept of a production function has been used in the field of Economics for many years, starting with agriculture and the production of simple goods. An early discussion of the special characteristics of the production function in service industries can be found in Fuchs (1968).
Casual observation suggests that there has been a bias towards the manufacturing sector in teaching and research in OM in the past (Roth and Menor, 2003). But there is now an awareness of the large role of services in the economy, research on services is growing, and service operations management appears in most management curricula. Heineke and Davis (2007) and Chase and Apte (2007) describe this in their articles in this Special Issue. Today it could be fairly said that the shift to services for developed economies is far advanced without room left to go much further. It is time to address another significant shift in the economy—that towards the information sector. The motivation for this paper is that the information sector has already become the dominant part of the economy in the U.S., and this shift is ongoing and inexorable. Furthermore, it does not work to cast study of the information sector in terms of information technology, computer science or information systems, any more than manufacturing management could be cast in terms of mechanical engineering, reaction kinetics or parts machining. Like any industry sector, there are management questions related to operations, technology management, marketing, strategy, and human resources that need to be examined, although they may look a bit different, and may have to be sliced differently from the traditional functional divisions. Certainly, the traditional topics addressed in OM are very much in evidence in the information sector as well. We would include among these topics, the analysis of processes and process economics, the framing of decisions about stocks, flows and capacities, the management of productivity, quality, time, variety and cost, the design of products and services, the configuration of the systems and networks by which products and services are produced and delivered, the management of these production and distribution systems, the management and application of new technologies, and the analysis of resource and capability based competition. The size and growth of the information sector suggest that it behooves us to study the special features of this sector, and to develop new research and educational perspectives.
