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10/6/2010
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IBM, Dell CEOs Present $1 Trillion IT Savings Plan To Feds

Sam Palmisano and Michael Dell believe the federal government's tech infrastructure is wasteful and inefficient.

The federal budget deficit is propped up in part by more than $1 trillion in unnecessary IT spending, according to the chief executive officers of two of the world's largest tech vendors.

In an essay published Wednesday on Politico.com, Sam Palmisano, of IBM, and Michael Dell, of Dell, argue that the federal government's IT infrastructure is too scattered and diverse, and not as efficient as it could be. Rationalizing many systems and processes could allow the feds to save more than $1 trillion over the next decade, they claim.

"The federal government spends approximately $76 billion to support its widely dispersed information technology assets. Up to 30% of that spending could be saved by further reducing IT overhead, consolidating data centers, eliminating redundant networks, and standardizing applications," Palmisano and Dell wrote.

The CEOs also said the federal government could save $500 billion by consolidating its multiple supply chains, and $200 billion by automating more processes in Medicare, the Internal Revenue Service, and other agencies and departments.

"This is not just theory. We've seen both the cost savings and the innovation that these approaches can unleash—in both the private and public sectors," said Palmisano and Dell. They noted that New York State has saved $889 million by using predictive analytics software to catch tax cheats, and that North Carolina has saved $25 million by using such software to spot Medicare fraud.

"The list could go on, describing success stories from governments across the country and around the world," said the CEOs. All told, they believe $1 trillion in waste could be rooted out of the system over the next ten years.

Their interest in the subject goes beyond the fact that both men are U.S. taxpayers. Contracts to undertake some of the tasks Palmisano and Dell describe could be worth billions to tech services vendors like IBM and Dell. But major, government outsourcing plans are notoriously tricky, and main such projects have failed.

IBM and Indiana, for instance, are currently suing each other over an outsourcing engagement that flopped. The CEOs also did not state how many federal IT jobs would be lost if the government were to implement their plan.

The Technology CEO Council, of which both Palmisano and Dell are members, plans to formally present its IT cost-cutting plan to the government on Wednesday.

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