Tech CEOs Offer Deficit-Busting Ideas

Ann All

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How Private Sector Best Practices Can Save Taxpayer Money.

Every armchair pundit has suggestions for how the Obama administration can cut the large and growing budget deficit. CEOs of several prominent technology companies got an opportunity to share their money-saving ideas at the White House on Wednesday, offering suggestions they said could cut deficits by $1 trillion over the next decade.


Members of the Technology CEO Council, including IBM's Sam Palmisano, Intel's Paul Otellini, Motorola's Greg Brown, Micron Technology's Steven Appleton, EMC's Joseph Tucci and Applied Materials' Michael Splinter, offered several technology-fueled suggestions, some of which they have successfully employed at their own companies. Surely not coincidentally, they also sell many of the products and services used to deliver these solutions.


Their eight suggestions, contained in a 10-page report on the Technology CEO website:

Consolidate IT infrastructure. The council thinks the federal government could shave up to 30 percent off its annual $76 billion expenditure to maintain IT assets by "reducing IT overhead, consolidating data centers, eliminating redundant networks and standardizing applications."


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IBM says it cut its overall IT expenses in half over the past five years through consolidation and standardization. It has lowered annual operating expenses by up to 40 percent by consolidating data centers. EMC says data center consolidation and adoption of cloud computing have helped it save $104.5 million over five years, including an estimated $80 million in capital equipment cost avoidance and $19 million of operating cost reduction thanks to increased data center power, cooling and space efficiency. The council also cited savings achieved by state government agencies. For example, Washtenaw County, Mich., saved some $2.5 million by consolidating IT infrastructure and applications. (At least some of that savings probably came from eliminating outdated, unused apps.)


Streamline government supply chains. Some government agencies, including the Postal Service and the Department of Defense, are introducing methods such as Lean Six Sigma to improve their supply chains. The government could save more than $500 billion over the next 10 years if it applied similar techniques across all of its supply chains and cut costs by up to 20 percent. A Lean Six Sigma project is under way at the Department for Work and Pensions, the UK's largest central and civil government department. Motorola saved $1.2 billion a year with a major supply chain transformation project. As I've written before, I think the government's convoluted procurement process needs a major overhaul.

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