I.B.M. Has Tech Answer for Woes of Economy

[dhilipkumar]

I.B.M.'s chief executive, Samuel J. Palmisano, is proposing a technology-fueled economic recovery plan that calls for public and private investment in more efficient systems for utility grids, traffic management, food distribution, water conservation and health care.

Recent technology advances make this possible, and the need is apparent, Mr. Palmisano will say in a speech he is scheduled to deliver Thursday to the Council on Foreign Relations in New York. Sixty-seven percent of electrical energy, for example, is lost because of inefficient power generation and grid management. Congested highways cost $78 billion a year in squandered working hours and gas burned.

Mr. Palmisano's speech never mentions I.B.M., but his proposal has a self-serving side. I.B.M. is increasingly playing the role of lead contractor in these so-called smart infrastructure projects around the world, from a traffic management network in Stockholm to electric grids in Texas.Some economists and policy experts say similar projects are a good way to improve the long-term health of the economy, potentially providing a foundation for innovation and growth across a range of industries.Applying more computing intelligence to help transform fields like transportation, energy and health care will be "critical to solving an array of pressing public problems," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan research group.

"The countries that take the lead in this area will be the nations that enact the best public-private partnerships," said Mr. Atkinson, who has seen the text of the speech.In an interview, Mr. Palmisano compared today's economic challenge, in broad strokes, with that faced by the United States as it struggled to emerge from the Depression or after World War II. In the 1930s, he said, the New Deal programs, among other things, brought electrical service to much of country — not only to rural homes, but also to factories, which no longer needed to build their own power plants, as many had previously.

After World War II, Mr. Palmisano said, the government's construction of a national highway system helped create larger markets for goods.

"We're at a similar stage now in that these are difficult economic times," he said. "The right way through it is not to hunker down, but to step up and invest and improve our competitiveness."In his speech, Mr. Palmisano points to the technology trends that are beginning to make his proposal possible and affordable. Items ranging from cars, appliances and packaged goods to roadways and utility wires, he says, are increasingly "instrumented" with transistors, sensors and radio frequency ID, or RFID, tags, "interconnected" over the Internet and "intelligent" because of advanced software that communicates with vast supercomputing data centers.

In energy, for example, computerized grids, thermostats and appliances can sense and communicate line failures or automatically turn off air-conditioners during peak load times to save money and fuel. I.B.M., to be sure, is one of many companies developing smarter grids, roads, food distribution and water conservation systems. In the technology sector, Microsoft, Cisco Systems, Hewlett-Packard, Oracle, SAP, Accenture and others are working on bringing computing intelligence to physical systems, Ted Schadler, an analyst at Forrester Research, said. But no other company, he said, yet has the breadth of hardware, software, services and research scientists to tackle these challenges.

"What seems different and noteworthy about the I.B.M. approach is its sweeping comprehensiveness and message," said Rosabeth Moss Kanter, a professor at the Harvard Business School. "Putting the pieces together under one inclusive and rather bold label can stimulate discussion and innovation."