IBM and a smarter future

Fascinating article in the FT by Samuel Palmisano, the President of IBM, on how the future of economies will not be dependent on spend on large capital projects but on clever solutions.

The question is whether the UK (and its regions such as Wales) can grasp the opportunity and stimulate "investments that envision and enable a smarter future".

"Governments around the world are grappling with some of the toughest decisions faced in generations. In severe recession, they are collectively considering as much as $4,500bn (€3,600bn, £3,200bn) in stimulus investments.

Understandably there is a sense of urgency, sometimes verging on desperation. But while the need for immediate economic stimulus is clear, we should not and need not panic.

Let us not revert to old-world thinking about new-world challenges.

Launching “public works” projects – putting people to work with shovels and jackhammers to put money into their pockets – is not the way to jump-start a 21st-century economy – or to build competitive advantage in the different world that is taking shape.

President Barack Obama and his administration understand that the US economy needs more than a relief package for troubled banks, asphalt for pot-holed streets and patches for schoolhouse roofs. They are proposing a higher-impact stimulus package that addresses future needs and national competitiveness.

We are seeing other examples of this kind of forward-looking thinking around the world. Many government and business leaders are not simply undertaking activity for activity’s sake but are seizing the opportunity to transform and innovate, in ways that create exportable skills, resources and technology. Such investments not only yield a greater long-term return, they are also more cost-effective.

For example, consider our power grids. They are the largest remaining artefact of the industrial age and they are due for an upgrade. Using broadband data streams, digital sensors and advanced analytics, utility companies can understand demand in real time and thus source and manage power more intelligently. In Europe, some utilities are working on smarter ways to integrate renewable sources of energy into the grid. Others are taking it further, building smart grid networks to enable consumers to plug in electric cars at a variety of locations. In this way, the digital grid provides incentives for growth in related industries. In many cases this growth primarily benefits smaller enterprises.

Getting smarter is possible across all our systems. The island of Malta, for example, is not only creating one of the world’s most advanced smart grids, it is also building smarter water and waste management systems. The same principles apply to all of these systems, including instrumentation with advanced sensor technology. As a result they are gaining a better understanding of demand, supply, routing and sourcing. They are able to manage the entire public services infrastructure more dynamically.

Consider the wireless explosion in India, which is forging a new business model for telecommunications services. Telecoms companies are creating radical new platforms to provide existing services at very low cost, and new ones based on real-time customer demand, in hours rather than months. This telecommunications revolution will spread to other markets as these companies grow faster and begin to export their skills.

Consider traffic congestion. Governments in Singapore, Stockholm and Brisbane, among many others, are developing new ways to monitor and manage traffic flow in city centres. This requires dynamic new systems to understand and predict vehicle patterns and encourage new behaviour. In Stockholm, congestion is down by 20 per cent and pollution by 12 per cent. Not only have these initiatives dramatically improved citizens’ quality of life, they are also spawning new thinking on related public services. In addition, many of these cities consider the projects as showcase investments, driving new forms of inward investment and future growth.

These governments and companies understand what technology is possible today and they are applying it to transform the systems through which their companies, communities and nations work.

Our planet is not just getting smaller and “flatter”, it is also becoming smarter. That is why governments, especially those gathering in April at the Group of 20 nations summit in London, need to shape stimulus investments that envision and enable a smarter future. There will be those who seize this opportunity and those who cling to old-world models. The choices they make will determine the ultimate winners as we emerge from recession".

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