Capacity utilization revisited: software, control and the growth of large technical systems

Abstract

This paper explains how a class of IT-intensive capital goods called control systems are used to co-ordinate the flow of goods, traffic, materials, funds, services or information through complex supply, production or distribution systems. The paper examines how they increase productivity by improving the utilization of installed capacity, creating economies of system that are distinct from the traditional economies of scale, speed and scope. The paper explains which sectors they are important in, and how innovation in control technologies relates to architectural changes in Large Technical Systems. It is illustrated by case studies of four very different sectors: elevators, retailing, telecommunications and investment banking. While control systems improve efficiency and enable product innovation, they also create reliability problems and can alter the social distribution of risk.