According to Alan Greenspan, chairman of the US Federal Reserve, the greater availability of information is causing shorter and shallower recessions because organisations can react more rapidly to changing business conditions.

"Our economic structure changed in the mid-1990s," he said last January. "The agent was a quantum leap in information availability. Firms have large quantities of data available virtually in real time and can resolve economic imbalances more rapidly than in the past."

To prove the point, city economist Denis Turner told a conference last week that the US economy is strong and the UK's is in the best shape it has been in his lifetime.

But before we pat ourselves on the back, consider the views of Paul Strassmann, US associate of analyst firm Butler Group. Since 1982 his research has shown no correlation between investment in information technology and profitability.

Greenspan has said that in the past, "lack of information allowed imbalances to build to such an extent that their correction engendered economic stress. The accompanying economic and financial disruptions often led to deep and prolonged recessions."

He implies that we no longer allow excess inventories to build up.

But Strassmann found the median inventory/cost of sales ratio for 400 US firms only fell from 17.12 to 17.09 between 1992 and 2000: computers did not slim inventories and therefore did not make inventory cycles more manageable.

It is hard to reconcile Greenspan's macroeconomic view with Strassmann's, which is based on aggregating the accounts of individual firms. Indeed, when Strassmann presented his research to Greenspan and the Federal Reserve Board of Governors in 1999, Strassmann found them "unreceptive".

Last autumn the McKinsey Global Institute issued a report on US productivity growth which largely supported Strassmann's findings, attributing growth mainly to product, service and process innovations, competition and cyclical demand factors. Strassmann particularly credits lower interest rates for raising productivity, but does concede that IT had a huge impact on productivity in some industries, but no effect in others.

Greenspan is expecting economic stability to return, prompting increased investment, and this includes investment in technology.

Strassmann says IT's share of investment peaked at 46.3 percent in 2001. "The methods available to plan and budget IT investments are, for all practical purposes, non-existent," he adds. "I doubt whether IT investments will resume close to their former pace until CEOs find investment proposals supported by better evidence than before."

The current industry mantras are "return on investment" and "rapid payback". These are traditional investment measures that have always applied.

It doesn't much matter whom you believe. What really matters is that firms benefit from the investments they make in IT. This requires implementations that change culture, practices and processes. Responsibility for squeezing out benefits lies with the business and is outside the direct control of IT departments. The benefits must be checked and ensured by strict post-implementation audits - but we do not hear much about that.

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