Industry CEOs: IT Efficiencies Could Save the Government $1 Trillion
If only government worked like the private sector. A few simple reorganizations, consolidations and technology upgrades could yield a trillion dollars in savings in just 10 years.
It’s not a pipe dream, according to top IT industry CEOs who advise President Obama and were at the White House last week pitching a comprehensive plan to turn the bloated federal government into a leaner machine.
The United States is in deep fiscal trouble, but the government still acts as if it’s business as usual, said Samuel J. Palmisano, chairman and CEO of IBM.
Palmisano, along with Dell Chairman and CEO Michael Dell, spoke Feb. 2 at theCenter for Strategic and International Studies, in Washington, D.C.
“We are in a financial crisis. So let’s wake up and act like it,” Palmisano said.
In awhite paper submitted last fall to Aneesh Paul Copra, U.S. chief technology officer, industry leaders estimated that there is at least $1 trillion ofIT-related inefficiency within the government. By applying similar cost-cutting techniques as those followed in the private sector, the government could slash wasteful spending by a trillion dollars within a decade, the report said.
This is not rocket science, Palmisano asserted. It is “just basic business practices” that have improved the competitiveness of top IT companies, and could be applied to the government.
It should be noted that many of the reforms they propose involve buying products and services that these companies supply.
“We’re interested in seeing real action” to help the United States stay competitive in a global economy, Dell said. “While other nations are advancing rapidly, [it] doesn’t really help our cause as Americans.”
For the U.S. government, the pressure to avert financial collapse only will intensify, he said. “We have this enormous debt that we’ve accumulated as a country.”
The formula to save a trillion dollars is a combination of massive consolidation of data centers, streamlining supply chains, shifting information networks to cloud-computing environments, and replacing aging hardware with modern systems that consume less energy.
“At IBM, we had 84 data centers; it went down to 14. We saved $3 billion,” Palisano said. “You virtualize the environment. … Plus, you reduce energy consumption.”
The government has 2,000 data centers, but probably needs far fewer, Palisano said. “There’s 50 states. How about two per state?”
Info-tech suppliers today can pack 2,500 computer nodes in a box half the size of a shipping container. Each node functions as the equivalent of 30 to 40 virtual servers. “In that same space, we can put about 14 petabytes of storage,” Dell said.
Large commercial organizations, universities and state governments are doing this, so federal agencies can do it as well, he said. “Using the new power-efficient technologies, you actually reduce power consumption by like 95 percent.”
Cloud computing — which many agencies still reject because shared servers are perceived to be vulnerable to cyber breaches — can be implemented in a secure fashion, Palmisano said
The rising federal deficit should be a motivating force for agencies to stop making excuses for not becoming more efficient, both executives insisted.
“Things can’t go unchallenged,” Palisano said. “We are in a very difficult situation. If it was normal times and life was moving on and things were great, you’d say, fine – business as usual. But we’re not in that kind of a set of circumstances.”
If any major corporation had the financial-debt structure that the government has, it would not exist, he said. “None of us could run those levels of debts and keep our jobs. You know, only in a political environment can that be the case. So to sit there and not ask ourselves honest, detailed, factual questions about solving the problem, I think, is not appropriate for any organization.”
Many of the initiatives proposed by the tech industry already are part of a Chopra-led effort to streamline government IT operations.