- Ever wonder about the cost of technology?
Has technology truly improved the quality of life? It is hard to say as many companies do not take the time to measure the variables involved, such as economics. Such analysis is normally documented as a Cost/Benefit Analysis, complete with break even points and return on investment. Although we would like to believe technology enhances productivity and profits, there is little or no data to substantiate it.
In recent years, we have seen technology enhance our powers of communication, transportation, sales, design, manufacturing and materials management, health management, wage war, and more. We have also seen changes in our culture as a result, such as personality changes, modification of our thinking patterns and values, language, and interpersonal relations. Technology enhancements come at a cost, and not just economical in nature. This is one reason why it is difficult to quantify how technology improves our lives.
To illustrate how technology affects us, imagine fighting a war today with weapons from World War II, e.g., ships, planes, tanks, and guns. We would look primitive by comparison, even to a third world country. Wanting to understand the differences between then and now, I made a comparison between tanks and fighter aircraft:
TANKS
| M4 SHERMAN | M1 ABRAMS | INCREASE | |
| Operational Range | 120 miles | 265 miles | +221% |
| Speed | 30 mph | 42 mph | +140% |
| Armament | 75mm + X | 105mm + X | +300% |
| Unit cost | $.4655M (2012) $ 33.5K (1942) | $8.58M (2012) | +1,843% |
For its time, the Sherman was a very cost effective solution. The unit cost back then was $33.5K which, when converted to 2012 dollars, comes to $.4655M, much cheaper than the Abrams which costs $8.5M per unit, an astounding increase. True, the Abrams can go farther and faster than the Sherman, not to mention superior armament. Nonetheless, the Sherman was a bargain by comparison and lasted a long time.
FIGHTER AIRCRAFT
| P-51 MUSTANG | F-16 F.FALCON | INCREASE | |
| Maximum speed | 437mph | 1,320 (Mach 2) | +302% |
| Armament | Guns + X | Guns, Mis, Bombs | +300% |
| Unit cost | $.459M (1998) $ 50.9K (1945) | $14.6M (1998) | +3,180% |
The P-51 Mustang was the sleek super fighter used in the closing years of WW2, the Korean War, and other conflicts. As a propeller plane though, jet fighters eventually forced its retirement. Aside from jets though, there was nothing to catch it and it was instrumental in bringing the war in Europe to a close. Regardless, it pales in comparison to the aircraft of today, such as the well known F-16 Flying Falcon, which could go three times faster and includes a diverse assortment of armaments, much more than the P-51. The drawback to the F-16 though was its unit cost, which was three times greater than the Mustang. Driving the cost was a quantum leap in complexity, requiring a higher level of sophistication to manage the technology.
I also considered the impact of technology on entertainment, particularly motion pictures. 1939 is considered by many to be the best year in terms of attendance, and outstanding movies produced by the studios, such as "Gone with the Wind," "It's a Wonderful Life," "The Wizard of Oz," "Mr. Smith Goes to Washington," "Goodbye, Mr. Chips," "Ninotchka," "Love Affair," and "Stagecoach." In studying the budget costs for these films, I found they cost on the average $1,889,297 to make in 1939 dollars ($30.8M in today's dollars).
I then studied the budget costs for the top movies thus far in 2013, including, "Iron Man 3," "Despicable Me 2," "Fast & Furious 6," "Monsters University," "Man of Steel," "The Croods," "World War Z," and "Oz the Great and Powerful."
On the average, the movies this year cost $175M each, more than five times the pictures in 1939. Today's movies all use color, enhanced audio, and all used computer generated graphics. Many were animated films. In contrast, most of the movies in 1939 were black and white (except "Gone with the Wind" and "The Wizard of Oz") and relied on story-lines, dialog, and acting.
MOTION PICTURE BUDGETS:
1939 - $ 30,822,495
2013 - $175,000,000 (+567.8%)
1939 - $ 30,822,495
2013 - $175,000,000 (+567.8%)
Here again, we see a tradeoff: today's movies may visually be better "eye candy" with enhanced audio, but they have sacrificed plots, scripts and acting in the process. Studios now are more inclined to trust the programmer's hand as opposed to the craftsmanship of the actor, actress, or writer.
In studying the numbers, it appears to double the productivity of something, you need to increase unit costs by at least tenfold, a disturbing figure encouraging inflation. This would suggest for every technology enhancement, the cost of living goes up, not down.
More importantly, with every technology improvement, our culture seems to change, particularly our ability to socialize. It affects our language, our work habits, our priorities, and our perspective on life. Such is the true cost of technology.
Keep the Faith!
Note: All trademarks both marked and unmarked belong to their respective companies.
Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com
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Copyright © 2013 by Tim Bryce. All rights reserved.
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