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Information Systems – Fundamentals and Issues
©1990-2006 John Lindsay, Kingston University, School of Information Systems

Chapter 3: Information Economy

Most writings on the information economy or an economy of information are concerned with the effect on prices of information, and the need for perfect information for a market to function efficiently. Fewer have been concerned with a market in information and the way in which information might be packaged, bought and sold, have value added to it. yet information affects every link in the value chain. The impact of digitised information is that it can be moved through the value chain and be processed in various different ways, that it provides not a new range of activities, but a new way of how activities could be done. It is not that there is a post- industrial society, it is that society has a new commodity if not yet a new commodity signifyer.

There seem to be four parts into which an information economy may be divided: information itself, the networks through which it moves, the processors which handle it along the way, and the services which are required to keep it moving, which in turn provide information into the system. This is best described diagramatically.

The consequences of this for an organisation should be clear: there are two economies. One exists inside the organisation, just as commodities exist inside a nation state. The other exists outside the organisation, just as trade is measured between nation states, but not within. There is no measure of the trade deficit between Kingston and Richmond, yet there is between Britain and France. What a strange set of ideas. Yet within Kingston, I have to trade with the supplier of my fruit juice through a special information system consisting of the universal commodity signifyer, money. Within the organisation the currency units are more complex and less clearly defined.

The boundaries of organisations, or let us regard them as systems, may then be defined as those endogenous: in which the exchange values and the exchange of use values happen with a unit of currency which is not measured or traded outside the system, and exogenous: in which exchange happens through a medium which is understood by a conversion protocol which is understood by the set of all possible exogenous systems.

As organisations have become more complex, it has been recognised that some sort of system has to be determined for measuring internal rates of return and internal activities as well as external, and that the units of measurement are not present to determine whether exchanges are equal or profitable. In addition the speed and complexity of operations means that an external activity, such as an change in the exchange rate of a currency, can so affect an operation, thought to be profitable, that it turns out not to be.

The information economy is intended to reduce these uncertainties in the design of information systems by establishing protocols whereby decisions might be taken on what information should be bought into an organisation, and how; what information generated within the organisation might be sold on outside the organisation; and how an internal market in information might function within the organisation.

I hope I've already established three levels of information system - the cellular to organismic, that of the individual being, and that of social systems. This coding is already ideological rather than ontological, but I'd like to make clear that at the moment I'm suggesting that the information economy applies only to the human social. I'd like to think that it might be possible to stretch the protocols so we can begin to think of other systems with the same metaphors, but am still wary of the attempt. Vulgar Skinnerian models of motivation or behaviorism couldn't cope with multi- stimulii response mechanisms, so can't explain why, despite frequent punishment freedom fighters (or terrorists according to perspective) continue their activities, unless they are receiving another and counterveiling stimulus, in which case there must be an economy with a balance sheet that takes decisions. Similarly the game (tit for tat) which says always respond to a bad deed with a bad deed and to a good one with a good one, but if you are receiving so many signals that you can't remember who was responsible for what, the tendency will be for a "neural" behaviour to emerge, where signals fie on the balance of strengths of signals prior to them, sending messages onwards which are similarly weighted. The idea of the neural network seems to me to be translatable to the information economy, except that the agencies of the neural network appear not to exercise the inequalities of the human economy.

But if we now attempt to combine the neural within an organisation, and a supra- organisation for which the sub- organisations are themselves neurons, then we begin to see an interesting picture emerge which involves command and control and the institutions of civil society in which the transformation between information and the universal commodity signifier takes on interesting dimensions. We have now to expand out model to a fourth layer (introduce here my cone model*).

Because this is too complex to understand across the the world as a whole (and thank heavens we do not yet have to consider extraplanetary trading systems), normally one will section the model to the market segments, both spatial and organisational, with which one is concerned. Note however my point in chapter 1 about the dangers of this, and by looking at the models earlier (figs n) it becomes clear that there is no natural locus for the market.

[Social spaces]

The metaphor for this of which we have some experience, and on which we all have opinions is the village in which we live. (Not yet the McLuhanian global one, but it will get there before we finish.) It is a principle of the free market that the developer may do what he likes with his property. His concern is whether the project "stacks up". Yet those living around are concerned with number of other things. So emerged legislation such as the Town and Country Planning Act of 1947 in Britain, and the parthenon of planning departments. Who then is responsible for the design of social spaces larger than that of the individual property owner? Who is responsible for the location of roads and railways, their capacity and pricing mechanisms, (and as the village as a productive unit grows towards the world economy) who for the output which is unwanted, the pollution?

Let us elaborate this idea of social spaces and urban design and stretch the metaphor of a motorway system to see how it parallels the social organisation of information.

[The motorway metaphor]

What's going on in the motorway metaphor is, at the most elementary level, things like roads, vehicles, signals. We have instances of journeys which have destinations, have intentions, have intelligence, but those actually really involve people who we normally call drivers.

This motorway metaphor - the motorway has to be built. That involves construction and materials. Another part the motorway manufacturing industry. It involves petroleum and service stations, the petroleum companies. Another part of it involves the police, the Automobile Association, ambulance services. Another part of it involves the insurance industry. It involves driving lessons, licences and the MOT. Another part of it, those of you who know the M25, involves traffic jams, which involves the idea of transportation planning which involves the idea of regulation and the State. So here we've got a little bit of a metaphor for a motorway system with it's cementing net but with all the major components of that, that involve market opportunities for each of the different players that are involved in some process or other in production and consumption.

[information and networks]

And so we then have to go on and say, well what does the motorway metaphor look like when we move it into the field of information and networks. And I think we have to first of all say, that there are receivers and transmitters. We've got the idea of receivers and transmitters, telephones, television, faxes, workstations, all the authors and readers, they're all producers of information and consumers of information. Their activities all have consciousness and determinancy about them, and they can be at home, they can be at work, they can be on the move, they're at it anytime and in many places. We are concerned then, with these receivers and transmitters with their manufacturing and sale. Predominantly at the moment,we are talking about telephones, televisions, faxes, workstations. What we will be talking about in 10 years time is less easy to see. That seems to me to be to parallel clearly a market for the process of motorway construction, of motorway manufacturing.

Secondly, we are concerned with the question of channels. So one is receivers and transmitters, two is the question of channels. The first layer of these channels seems to be to the traditional hard wiring, copper wires and probably optical fibres. This is a mechanism of communication which seems tome to be fairly clear. Secondly, we probably have anywhere that there's line of sight, anywhere that you can have microwave transmission. Thirdly, there's anywhere that you could bung up a satellite. So here are 3 quite clear manufacturing opportunities to go back to the receiver and transmission. The channels are, first of all, manufacturing opportunities, the optical fibres have to be manufactured, the transmitters and receivers have to be manufactured, the satellites have to be launched, and so on and so forth.

Thirdly, we have the question of switches. Now the switches are what is going to link together these different categories of channels, and the switches have to understand, firstly, where something is going. Secondly, the best route and charge. So there are your primitives, that every act, every author, every reader, every act of communication, is basically a packet that has to start off with an idea of where it's going and it has to have a mechanism of understanding the best route by which it's going to get there, for which there is some charge. Where these things are going to be really is a matter of sublime irrelevance. You can park your satellite in any available parking space, either in a geostationary orbit or a sun synchronous sort. Your line of sight can be from any building to any building provided you can get a line of sight, or from every hill to any hill.

Now I think if you look at channels in this way, then the idea of copper wires and optical fibres as being the real barrier to entry that British Telecom has been able to put in place historically becomes a bit weak, because it might well be that all somebody's got to do is be able to lease, (rather as happened at Kingston College of Further Education), lease a parking space on the tallest building in the area and bung up a mechanism there whereby within line of sight of anywhere in the region. I understand that video transmission over 15 kilometres on line of sight is now absolutely feasible and in practice.

Given that everything I read tells me that shunting video transmission down copper wires is a major impediment to the movement of video data might indicate that all sorts of people could come into this competition. Bodies like British Rail and the Post Office appear obvious contenders for network management. I don't see why it couldn't be any old property developing company. We already know that the major banks are making more money out of the leasing and management of the spaces above their branches, than they make from managing the accounts inside their branches. So the capacity to do all sorts of things with odd bits of real estate, if you can put the right consortium together, is fairly considerable.

The fourth one is the area of what I'm calling protocols. The protocols that we grasp and understand already, is the idea, for example, of addresses. We've already got the idea that the Post Office actually couldn't function if we didn't have in place a regulated and systematic notation whereby people's physical and spatially located activity can be accounted in a way which can be understood by people with virtually no training at all. In fact, the innovation of the Post Office over the last 15 years or so, the idea of the post code, actually then produces for us a digitised map data set whereby any particular event can be spatially located down to the level of hardly more than a few square metres. The post code at its lowest level of disaggregation at the moment, probably involves something like 7-10 mailing addresses. We also know that the entire post system involving 23 million addresses is available on a CD ROM, and so the capacity to put this address system in place and then be able to organise, either at the level of the post code as a digitised map data set boundary defined standardised polygon, or moving from there on to some more informal form of addressing, like, for example, street names and street numbers and so on and so forth, that really the bulk of the protocols for those are in place already. There's a bit of blurring at the edges in terms of how you actually structure and define the orders of the digitised map data sets and there are certainly some rather clever little games about how you handle the boundary spaces involving things like, quad tree analysis, but that's really simply in order to reduce the drain on the processing capacity, of being able to handle very large chunks of data.

But you've not only got that capacity in place, you've got the capacity from the minimum data set of your lowest possible spatial boundary to be able to aggregate upwards in order that at one level you end up with Mundocart, where you've got an entire map of the world which can either operate at a global level or can, with the click of the jolly old proverbial mouse, actually bounce down to any disaggregated level you like. Now the Mundocart, if I remember rightly, has only digitised 2 or 3 million spaces, so it's only really the major United States cities that are handled in this sort of way. If you click over into India, it's rather a sort of big blob with Hyderabad and Ahmedabad and Delhi and not very much else.

But it's clear that the capacity is there. We already know that the Australian census is going to be published in 1991 on CD ROM? We know that the United States with their Tiger program are going to integrate the capacity to handle the whole of the United States census linked into an integrated digitised map data set which is going to be capable of generating data disaggregated to the level of either an enumeration district or a post code. And if we are talking about those sort of data sets which are predominantly concerned with polygons, it's then not very difficult to imagine, and I know there is one major British Telecom research project in this area, to then say, that nodes and channels within these networks are in turn, simply either where your telephone cables are lying,where the water board has got its pipes, where the gas board has got its pipes and so on and so forth.

So it seems to me that we need protocols that deal with the addressing facilities. We need protocols that are involved in the mapping facilities in order that the spatial and temporal relationship of information systems that I've been talking about can be put in place, and we need protocols about how the information is actually going to be communicated through this information city. It ought to be a matter of absolutely sublime indifference to the author the reader, how the data gets from point A to point B. That should be a matter which is outside of their concern. What they require, is to know where it's to go, to know when it's going to arrive there and to dispatch it. And it seems to me that there's a whole layer of activities that should be put in place in order to be able to satisfy these 2 requirements.

And another of these protocols, as I've said already, I think ought to be in education and training, because it seems to me that even if we are capable of thinking about this motorway network, we are capable of seeing the idea of an intelligent city that has these sorts of things to it. It has vehicles, it has signalling systems, it has a motorway construction, it has a police force and it has a driver/vehicle licensing centre and what have you. Then we are going to need a similar education and training if an entire population is going to be able to understand and take advantage of this market in the intelligent city where the price of moving any goods or person from point A to point B.

In other words the pricing in the distribution and exchange part of the model becomes so cheap, that we fundamentally change the relationship between the cost of production and the cost of consumption, for any particular commodity that we might be involved in. But this has the potential in turn, to really quite change the ideas in which we go about the process of marketing. But actually the idea that we are into at the moment of High Street retailers, the idea of home banking, the idea of smart cards and so on and so forth, have a capacity to really be quite fundamentally changed if we can grasp the way that this information city is potentially going to work.

Now how are parts of this going to develop? Quite clearly, it's not going to be any individual with a Masterplan. We are not going to have some Department of Transport person coming along and saying, well what we need is the M25 and because nobody wants it, will only build it to a third of its capacity that we know it's going to be, and because they, in turn, completely get wrong the fact that if you intervene in a transportation system then actually you don't simply redistribute the balance of distribution of transport, you actually change the pricing of transport. Any therefore, the consequence of that is, by improving your transport system, you make it cheaper to move a person or a thing from point A to point B; you therefore change the entire absorption and consumption of that network as a whole. Whereas, if you change the functioning of an information network, we are far from clear that it's going to have those sorts of consequences at all. In fact it would appear that, provided we are absolutely certain what the technical issues are, in terms of the capacity of the switches, the capacities of the channels, then actually we could change the costs of transportation of goods, services and people in ways that we really haven't grasped so far.

So, how are parts of this going to develop? Workstations; we've got a good deal of that there already. People are now using their Mackintosh environment in a way which is really quite different (and there's no hissing on that). The next one you could hiss to your heart's content. Whereas, people are still using MSDOS on those dreadful horrible little machines manufactured by a company which is unmentionable, in order to really totally cripple their lives. I don't know whether any of you saw the programme last night on television, the Goddess and the Computer, about the way in which water management systems were used in Indonesia with an environment that really people could grapple with immediately. Now the information might be wrong, the politics might be wrong, but people were able to grasp the idea of modelling extremely quickly and able to test their received models of the world on the basis of their thousand years of activity, against the models that had been produced to analyse the developments of complexity by increase in the population flow.

So it seems to me that in the foreseeable future, that sort of environment is going to be one where a very large number of people can actually engage in manipulating information, thereafter, we'll get into talking to the little machines, but that's going to be probably a few years. So for the foreseeable future, my guess is that something like the Mackintosh environment at the price that Alan Sugar can get the things into the shops, will give us the mechanism where workstations really become about as disposable as most of the other hi-fi equipment.

Possibly another part of this will come through ISDN. I think it's perfectly conceivable that core and spine wiring through involving some sort or other,optical fibres, some sort of network, large parts of that are in place already. How it's going to develop is less clear, but it seems to me that there might in turn be quite a large number of cores and spines that have got some sort of interfaces to one another. And then we've got the mechanism of being able to communicate amongst them.

A third area which might be interesting, is the area involved around Centrex. It might be that there's a capacity there by really putting intelligence into switches in order that it doesn't actually matter whether you network nodes are on the roofs of buildings and the buildings are wired. There's already quite a substantial literature in intelligent buildings and that the capacity is then for a Centrex type intelligent exchange to be sitting on a building or in a building or to go from buildings to another building which is called an exchange which is dedicated to that purpose. It might be that these buildings begin to work like token rings; that they've simply got enough intelligence built into them; that they receive a bundle of messages and they simply forward them on by the optimal route to their destination. But this idea of being able to put intelligence into switches in order that switches can be gathered into exchanges which can be spatially located almost anywhere, but as a consequence of the intelligence contained in the switches, a message can be communicated from any point to any point, possibly independently of hard wiring or alternatively by a variation in pricing according to investment capital,development capital, rate of return on capital employed; you can go through a process whereby you can optimise the utilisation of your networks to the best of your convenience.

Another part that clearly is going to be required is this idea of regulation. I'm always amused, there's a famous quote by a British Telecom Director, who said, "what we require is competition and co-operation". And I had another version of this at the Financial Times Conference on electronic financial services, where one of the bankers stood up and said, "what we want is competition in the High Street and we want co-operation in the back rooms". And what the banker didn't understand is when he talks about co-operation in the back rooms, what he means is all these people fighting with one another over who's going to end up setting standards, over who's going to control significant chunks of the market.

But the other side of the incomprehensibility of the 2 of them, this was a classic example of the unspeakable in pursuit of the inedible, the telecommunications and computing people, they were saying that what they require is the ability to compete for markets over standards but what they require is a stable money supply. Because of course, they didn't understand that what the bankers regards as competition,is being able to fight over money supply. Being able to fight over the values of currencies and the values of prices. So here we had an example where two really mutually incomprehensive groups of people were talking to one another about how these networks are not going to come into place.

Part of what we can see also though, is the development of value added data services. Bits of them are in place. They started in a large part with libraries and librarianship, Dialogue, ESA, IRS, Pergamon and so on and so forth. Firstly concerned with access to very large bibliographic data services. It wasn't long after that,that companies began to trade in financial information and out of things like Reuters and then Seac and Topic and what have you. You've got to trade in financial service which took rather a battering in October 1987 and hasn't recovered, but what it has, I think, indicated, is there are substantial other niches where trading in this information creates a potential, I'm sure that you already know about things like Trader Net, you're probably involved in Swift and so on and so forth. I've certainly seen one of your documents which identified half a dozen market niches where you thought that value added data services was where you ought to be in place. So bits of this information city are in place already. Rather like, you remember the film, is it The Life of Brian, you know, what did the Romans ever give us, gave us aqueduct here,but apart from aqueduct what did the Romans ever give us. Well, they gave us housing, yes, well apart from housing what have the Romans ever given us, they gave us security and banks and so on and so forth, so we've got bits of it in place, but it's clear that we don't yet have anything that people can grasp hold of with the metaphor, with the clarity of the idea as when we talk about a motorway system. And if somebody or a company is looking where they are being located, then people actually can't grasp their market opportunities with a clarity that they can say, there's the Automobile Association, or there's the driver/vehicle licensing centre or there Austin's - actually Austin Rovers are a very bad example (despite the fact that Graham Day has just got a knighthood out of it), because who could say what market Austin Rover's into. So there are clearly major barriers in turn. Having identified that we've got bits of it in place already, it seems to me that there are major barriers.

The first is really something which is structural to the nature of capital itself. It's a bit like the Spirit of Free Enterprise sailing out of Zeebrugge with it's bows wide open. There's an enormous amount of water, enormous amount of capital, slushing around inside this tanker, but companies are not prepared to invest substantially because the rates of return on capital employed are not high enough.

Secondly there is the issue of pricing and charging. Much of this I've covered already and will return to.

What relates the organic composition of capital to pricing and charging, is what I call the proof problem in information systems design. Although we've got an enormous amount of detail in things like structured systems and data analysis and data based sizing and so on and so forth, we are much weaker in having any idea about how to relate an information strategy to the actual design of that strategy, the design of the architecture that's going to implement that strategy. And we are much weaker in being able to evaluate investment in information systems design and investment in information technology in order to justify that investment against other possible types of investment or investment in other areas of markets.

Fourthly, we've got this issue of Chinese walls which seems to be a necessary concomitant of this idea of competition. So in several of the functioning finance houses in the cities, they're not Chinese walls just in terms of people putting up boundaries that you can't cross, they've actually built physical walls in order to stop 2 departments talking to one another. And I think that as the system becomes more complex, well we've got free movement or relatively free movement of goods in these networks here. We are going to have increasing impediments to the free movement of information in networks, not simply because of the question of pricing and charging, but because of the question of privacy and secrecy that I started off with. That, because information functions as a commodity in a way different from other commodities, there are a whole series of issues built in there that are going to increase problems.

And fifthly, I think the barrier is going to be this absence of generic protocols, this business whereby we actually don't have the addressing system,we don't have the mapping system for this new information city. And so it's going to be difficult for information to successfully communicate from one place to another.

So this metaphor of the motorway has taken us quite a long way towards modelling the information economy and how it might develop.

The next logical argument is to move back to the village which is linked to other villages by this motorway. The village was a metaphor for an organisation. Beyond the village or romantic memory there is the city. The idea of the intelligent city draws a little on some work that I was involved in, in the city of Kawasaki in Japan, where people used to make motor-bikes and because of the nasty little yellow chappies, (who as far as they are concerned, are the Koreans), they don't make ships any more, they don't make motorcars any more,they don't make motor- bikes any more, they don't make steel any more, they don't make aluminium any more. All that fantastic industrial development that took place after the 1950s has been wiped out and the city government of Kawasaki opened up (and this was a fascinating experiment) a competition for information strategies for the city of Kawasaki[1]. I was at the conference at which the result was announced, and it's not an accident this competition was won by an architect, because I don't know that we have any tradition of opening up information strategies to competition, in the way in which architects do it. The conclusion might be, either you don't end up with the Lloyds building, or you do end up with the Lloyds building, but I think the process of competition actually creates interesting ideas. And the idea that came out of this Kawasaki city study, was the idea of the intelligent city.

Now the intelligent city seems to me to be a manageable idea because people understand urban spaces in some sense as not only being spatially delimited, but people understand them as being complex in a way in which urban dwellers don't understand rural communities as being complex. I think one could, with no difficulty, talk about an intelligent universe, but let's limit ourselves for the moment to an idea of an intelligent city. Which takes us back to the highway, which is fundamentally concerned with the movement of people and things. An alternative to the movement of people and things is the movement of information. Or you could be moving information about the movement of people and things.

But if the metaphor of the villages and the cities and the motorway takes us part of the way to understanding the information economy, we need to come back to the issue of the development of the individual property and the development of the urban environment to take our understanding any further. The individual property developer is concerned only whether the project will "stack up". Possibly the utilities will be concerned about whether there will be an adequate water supply and sewerage for what he is considering. Someone will have to be concerned about providing solid waste disposal. There will be a process of planning application which will govern parking spaces, but each of these is concerned with the immediate locality only. Someone else somewhere might be concerned with the shape and character of the whole environment.

As societies develop institutions are developed in which issues over competition for water, space, conditions of employment of labour and so forth are resolved in various ways. At some stage markets and laws develop which play particular roles. In an information economy we are far from clear how these will develop. The problem becomes more complex because of the mutual incomprehension of various players. Lawyers, politicians and judges appear to have considerable difficulty understanding the basics of the new information technology; information engineers (if I may use that as a generic term for a moment) a minimal grasp of political science or social theory.[2]

Agencies of local government appear to have little scope to influence their information economies[3]. The "big raisin" however is a different matter. In chapter 1 I indicated some of the issues which an organisation might have to consider when developing its information strategy under the P and E of the PES- T. Here we have to consider some of the activities of government to see how they are affecting the development of the information economy; in other words how they will impinge on the environment within which these information strategies are formed, and how the various players might influence that environment[4]. To part of this we will have to return when discussing design.

Intellectual property rights, copyright and patent

Freedom of information in the US sense and in the British sense

Telecommunications - cabling, broadcast

Attempting to establish ground rules for competition within particular markets and among nation states

Fixing the exchange rate of the national currency and thus in part the price in others

Imposing import and export controls and tariffs

Attempting to control what travels through the "national ether"

[information as commodity]

So what then are the particular characteristics of information which make it behave as a commodity in such a peculiar way.

First, when you sell it on, you still have it. If you knit a woolly jumper, though you still have the design (which you might have bought, or photocopied [stolen] and I would argue is in fact information), you no longer have the wool or the jumper. (Interestingly the free market in patterns for woolly jumpers appears really to be almost free.) Someone has paid for the use value of the jumper. But when you sell the pattern you might still have it. When you sell information in a digitised form, it is very likely that you will retain the information; in fact the actual owner of the information might not even know that it has been sold or notice its absence (for of course it is not absent, merely somewhere else at the same time.

This is its next characteristic: it may be exactly the same but in different places at the same time. It might be possible to effect a change on it, and almost simultaneously effect that change in many other places.

Its value might be added to by this process of being capable of being changed, or with all certainty not being capable of being changed; it might be added to y protecting it from someone else having it, or by someone else being able to have access to it. It might be the particular time it is in a particular place, or the particular place in which it is. It might be just for that one person in that pace at that time that it has the value.

It is possible to increase the value of this information by using it – adding value. The jumper can have value added to it by being worn in only the most exceptional circumstances. Normally the consumption of the use value of the jumper, in the process of changing it into a rag, is called wearing out. Information cannot wear out. For some information the more it is used the more valuable it becomes, for other the less. But even this depends on the perception of the users.

We have no mechanism for measuring its quantity, and no mechanism for measuring its value. There are not even any units for establishing the measurement. When units are taken from other practices and an attempt is made to apply them the result is dissatisfaction, confusion and perturbations in the flow of this commodity. Do you measure access to a database by the length of time you are logged on, the amount of data you access, the number of records you port over? How does the "owner" of the database know what has been ported? Do you measure the cost of the telecommunications by the length of connect time (as on British telephones) or by the traffic (as in German datacomms * (check details)


The information economy in the context of a higher education institution.

Clearly the functioning of the information economy in a higher education institution is from the beginning distorted by the location of higher education in the economy at large. Some of this stems from the relationship with central government and some from the traditions of funding inherited from the middle ages.

As indicated in the appendix on information strategy, the majority of the finance comes from central government funding calculated on the basis of a full time equivalent of a costing of an individual student. Within a higher education institution the distribution of this funding to teaching departments and to service departments is then distorted by the failure to function either of a market in higher education in general or in an internal market. The external market in higher education is distorted because no employer in particular is going to invest substantially in the training of the workforce, because that merely increases the capacity of the workforce to be able to move elsewhere. No individual student is going to be capable of paying for the costs of higher education as currently calculated in order to be able to increase the competitive advantage of that particular student. Clearly, there is no concept of an information marketplace in the management of educational resources. Although there have been attempts to devise mechanisms for making markets more effective in higher education, the experience in North America probably goes further than that in Europe. Even so, there is very little evidence so far that a functioning market in higher education can work any more effectively than a functioning market in housing, water, transport, health or any of the other of the more complex areas of the economy.

If the economy of higher education is then difficult to disentangle from larger political processes, the information economy within any particular institution becomes even more complex to examine because of a series of historical structures that have developed. If we look at the finance of the library for example, it has been a general practice in higher education for this to be a decision from within the organisation. It is not common in Britain for departmental or individual libraries to be built up but for the library to exist as an operating department in the organisation at large. However the funding of the library as a single annual tranche or finance out of the general budget has been either left up to the professional staff of the library to spend or by departmental representatives to spend and the mix of documents which the library has stored has then become the consequence of its proportion of budget over the year, taking into account the change in staffing levels, the wage bill, the general costs of heating, lighting and electricity normally being spread across the organisation as a whole. Therefore it becomes impossible to make any estimations of the unit cost of any operations that the library might be concerned with. There has been a long tradition of making the use of the library free at the point of consumption to every student. So there is no direct itemisation or capacity to work out a cost proportion to individual students or attempt to charge students for access to particular resources. Marginal activities, such as provision of photocopies but even something like an inter- library loan, which might have a unit cost associated with it, actually go beyond the boundary of the organisation and therefore dont mean internal finance transfer operations but the real spending of money have not been charged to individual students. There have been all sort of mechanisms to try and devise whereby students can be made to pay for the utilisation of library services but these are still marginal. We have to therefore raise the question of whether the provision of library services at the point of consumption free of any immediate and recognisable charge is an efficient way to manage resources. This issue is further complicated because while the library service is predominantly concerned with books, journals, reports and documents that have a physical location on a shelf and for which the copy cost of putting them through a photocopier, leaving out for a moment the intellectual property rights associated with that, means a real cost in effort and expendable materials.

As soon as we move into predominantly electronic documents, the process becomes more complicated. The electronic document might be an external database for which there is a telecommunications charge, a host carrier charge, and an information provider charge. It might be a database spun in the organisation which is then cross traffic independent in charging but for which there is an access charge. The most obvious form of this is a compact disc relearning memory, but that in turn might be networked across the organisation in which case the problem exists of defining who the boundaries of the organisation include and exclude. For example, it might be data which is stored on a hard disc and kept in virtual memory accessible to all the members of the organisation. The provision of this electronic information then raises a further layer of complexity because we not only have to consider the pricing, charging, costing, funding and paying devices from within the library, and the changes in technical devices which involve access to electronic information, but we have to add into it the fact that there is another department which has historically been responsible for providing computing facilities across the whole of the higher education institution. Hence, though access to electronic databases and optical storage devices is increasing, there has been little evidence that the managers of information resources are capable of activing in a marketplace to change the prices they pay or the services they provide.

In parallel with the library, the computer centre has traditionally been funded from central government in the sense that central computing facilities where provided by the Department of Education & Science through the Computer Board and over a 13 year planning cycle, the Computer Board would allocate two organisations. The hardware requirements and the central computing resources were then available to all the members of the institution, although they were most heavily used by very particular departments. The changes in technology over the last 10 years has changed the role of the Computer Board and the break up of the binary divide between university and polytechnic institutions has added to this complexity. It is now generally the case that institutions will be responsible for providing their own intra- organisational information technology while the network will remain the responsibility of a central government organisation. In turn the child of the computer board, the inter- university information committee and the information network services, will provide a forum for negotiation of prices of software licences, of hardware procurement and of data sets for higher education in general. While this process has been developing in Britain, there has been a similar international development.

Although the organisation is now responsible for the provision of its technical architecture and of the work stations on which all the processors will be run and on which the bulk of the information will be accessed, there is still no tradition of making students and staff in any sense pay for the access, the network, or the information. So the information network products services, the information economy in higher education, are all free at the point of consumption by the user. In practice, there has always been a considerable degree of externalisation in the sense that students have been expected to buy their own textbooks, and there has been a difference in access to resources according to whether a student is capable of buying books or not. Over the last 10 years, there has been an increasing tendency for students to buy their own workstations. As the technology develops, the laptop computer, a device with possible 4 megabytes of memory, a processing capacity, 40 megabytes of store, disc access and necessary network management software, in other words a personal object directory server, becomes the normal device that students would expect to have access to. It means that their information processing capacity becomes free of time and space. Its only when more sophisticated processing capacities are required for particular activities, that they will require something beyond this. The vast bulk of the students, the million students in higher education in Britain, will start off from that platform. The capacity for hardware manufacturers are in a position to negotiate prices across a range of equipment from the very biggest processors to the smallest pocket calculators in an environment where much of the development work also occurs means that this should be a very attractive area for investment. However, there is little evidence of manufacturers seeing the value of their kit being make available in the market.

One component of what goes on in higher education is the provision of teaching services to students, the other component is that of research. And here there has been more of a tendency towards insisting that the information requirement of a research activity should be paid for out of the project. Given that the institution in turn puts an overhead onto project finance, this has meant that organisations which are weaker traditionally have in practice been able to do very much less research. Does the management of an organisation in this way then lead to it functioning efficiently? The question must be as follows : Were the students to pay for information at the point of consumption, whether they were to pay for the network processing and services in a more direct way, would it be possible for the organisation to be able to provide a higher level of service.

This problem now becomes more complex if you break the organisation into its constituent parts and say that students dont by and large have relationships with the organisation as a whole but students have a relationship with the department. Students by and large undertake course, the courses are delivered by the teachers, and the teachers are organised into schools. It is to a course that the bulk of the full time equivalent of the student unit of resource is devolved and it is the department which is responsible for the building of the courses which are going to attract the student. The department in turn makes use of central resources of which the library and the computer centre are one. Rooms and teaching spaces are a much more likely resource. As some courses are quite intensive consumers of space, others less so, the question must be whether a devolved management structure within an institution of higher education will then produce a more efficient allocation of resources. The building of an information system in order to allow a market in this sort of data to exist would then be drawn out of the set of strategic options that we produced in Chapter 1. Yet once again we see the relationship between organisational form, information architecture and business strategy coming into operation. The development of a change in the organisational form, a flattening of hierarchies or a deepening of hierarches, a devolvement of responsibility to operational departments, a centralisation of decision taking capacity, would in turn require different types of information systems, different information architectures.

So far, our information economy for an institution of higher education has concentrated on the library and the computer centre, and to a much lesser extent on the negotiation, the bargaining power, between students and lecturers. There are of course substantial other components of the organisation including the personnel or human resources management, the financial management and the services, such as student accommodation and catering that have been so far left untouched. Because these central services are about providing the information infrastructure within which the organisation can function, the way in which an economy in this data can be achieved, is as yet far from clear. However, what we can say is that reducing the costs of these service operations to a minimum, is a way of releasing resources for distribution to other components of the organisation. Clearly from the strategic requirements in Chapter 1, the sorts of strategic decisions which can be taken either by departments or by institutions as a whole include whether to put resources into research and consultancy (predominantly in post graduate eduation), into attracting short term courses paid for out of the industrial development sectors of the region, or into increasing undergraduate student numbers. These are all strategic decisions and information is required in order to be able to both implement and monitor these decisions. The most important components are going to be deciding which of them produce a rate of return on capital employed larger than another ; the relationship between the units of capital employed and return on capital employed and the major chunk of variable capital which is going to be the staff wages ; the relationship between the productivity of the staff, the profitability of the staff and the activities the staff are involved in. These are the sorts of management decisions we are going to require but it is not clear how we are going to achieve an economy in terms of the information itself.


[1]See *get Kawasaki Conference citation, and particularly Peter *'s paper.

[2]I don't want to go into this point at length, but see for example Herbert Simon's reference to the "big raisin" in his Sciences of the artificial or Igor Aleksander in his *get citation. For the incomprehension of judges see *find a couple of references.

[3]Though see the series of local information plans produced under the influence of the British Library Research and Development Department, for example * get a few and see also the GLC's attempt at a strategy for London *get citation right including pages from Nigel. *consider whether it is worth putting in more here

[4]It seems clear to me that it is necessary to have a theory of how government functions in order to be able to plan the development of information systems. In a work such as this though I can hardly summarise the various positions of political science. One might in a rather vulgar way though suggest that there are three broad positions: the "elitist" - that government is by us, for us; the pluralist - that there are many competing pressure and interest groups, politics being the process of reconciliation of these conflicts; and the Marxist, which says that government is the domination of the class which owns and controls property relations over the class which has no alternative but to sell its labour power. The concerns of government in this last category are threefold: domination of one class over others, pursuing the national interest of the ruling class of that nation state against other nation states, and avoiding the mutual destruction of the sordid band of brothers who make up that national banditry. (It will be noticable in these neutral descriptions which one I adopt.)

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