Dell, IBM Say Taxes, Debt Undermining U.S. Competitiveness

The CEOs of Dell and IBM warn that the U.S. is risking its competitive technological edge in several ways.

As mounting public deficits dominate discourse in Washington and in state capitals throughout the country, leaders from the technology industry said they are eager to help address the problem. The federal government can save $1 trillion over the next decade, claimed Dell CEO Michael Dell and IBM Chairman and CEO Samuel Palmisano, by applying homegrown expertise, technology and organizational innovation to its information networks and management practices.

The discussion, which took place during a technology and public policy program hosted by the Center for Strategic and International Studies (CSIS), drew on an October 2010 Technology CEO Council report, "One Trillion Reasons: How Commercial Best Practices to Maximize Productivity Can Save Taxpayer Money and Enhance Government Services."

Dell and Palmisano argued that the U.S. government needs to spend less time on partisan bickering and more time addressing issues that affect the country's technological competitiveness, highlighting the U.S. deficit, high corporate tax rates (the U.S. rate is more than 30 percent, compared with as little as 10 percent in other countries) and the country's unsatisfactory education system.

Palmisano added that the country's citizens are lacking a clear directive from Uncle Sam on fostering innovation and talents required by the high-tech industries powering the world economy. "What is missing is someone saying, 'We're going to take the country from here to there,'" he argued. "Then go out and sell the case. If you can't sell and people say, 'That's not what we want,' then we have what we have today."

In reference to the October report, Dell pointed out that basic steps such as employing more Web-based citizen services and consolidation of government data centers could go a long way toward saving the government money. If government officials stand in the way of the "enormous improvements in technology," they do so at their own peril, Dell said. "You just lose relevance and you fall behind," he warned. "Holding onto stuff that is four or five or six years old is incredibly expensive."

The October report estimated that IT infrastructure consolidation could save the government $150 billion to $200 billion, while reducing field operations and moving to electronic self-service could net $50 billion in savings. Streamlining government supply chains alone could save half a trillion dollars, while energy reduction could save Uncle Sam $20 billion.

IBM cut its overall IT expenses in half over the past five years through consolidation and standardization, and has dramatically reduced its data center operations and saved up to 40 percent in operating expenses, Palmisano said.

One often-cited opportunity for cost savings through emerging technology comes from cloud computing. Government agencies that have moved to cloud computing have generally achieved between 25 and 50 percent in savings associated with information technology operations, according to a Brookings Institution report called "Saving Money Through the Cloud," cited in the CSIS report.

"By harnessing major technological shifts and adopting best business practices, we can not only make our government far more productive, but also foster greater innovation in areas ranging from healthcare to education and energy-innovation that will generate economic growth and job creation," the October report stated. "Our country still possesses the world's greatest innovation engine-American society itself. Both business and government can and must be vital partners in making that engine fire on all cylinders."