IBM CEO Touts Smart Systems, Efficient Infrastructure

Supply chain inefficiencies cost the consumer products and retail industries an estimated $40 billion annually, or 3.5% of sales, IBM's Sam Palmisano pointed out.
IBM chairman and CEO Sam Palmisano stressed the importance of technology and smart systems for improving global infrastructure and helping pull out of a recession during a recent speech.

"It's obvious, when you consider the trajectories of development driving the planet today, that we're going to have to run a lot smarter and more efficiently -- especially as we seek the next areas of investment to drive economic growth and to move large parts of the global economy out of recession.

"Fortunately, we now can," Palmisano told the Council on Foreign Relations last week. "We see this in how companies and institutions are rethinking their systems and applying technology in new ways."

He stressed the need for smart systems and said that those with courage and vision can find opportunity in today's struggles. He focused on infrastructure as he reviewed many of the world's most pressing problems and possibilities for improvement. He said the current economic climate has prompted people to demand change, but the moment won't last forever. Finally, he said collaboration and cooperation are key ingredients for leadership.

"Over the next couple of years, there will be winners, and there will be losers," he said. "And though it may not be easy to see now, I believe we will see new leaders emerge who win not by surviving the storm, but by changing the game."

Palmisano cited reports that energy grids lose as much as 40% to 70% from inefficient systems and said traffic congestion in the United States costs $78 billion a year. That's 4.2 billion lost hours and 2.9 billion gallons, he said. Stockholm, Sweden's smart-traffic system reduced traffic by 20% and drove emissions down by 12%, while 40,000 new users take advantage of daily public transportation, he said.

Supply chain inefficiencies cost the consumer products and retail industries an estimated $40 billion annually, or 3.5% of sales, Palmisano pointed out.

While health care spending plunges more than 100 million people into poverty each year, health care providers fail to link diagnosis to drug discovery, delivery, insurance, and employers, he said. Palmisano said smart health care systems can decrease treatment costs by up to 90%.

He pointed out that water use has risen twice the rate of population growth, or sixfold, since the 1900s, while half the world's people lack adequate sanitation.

"According to the Asian Development Bank, one in five people living today lacks access to safe drinking water," he said. "And, of course, the crisis in our financial markets. This will be analyzed for decades, but one thing is already clear: Financial institutions spread risk but weren't able to track risk -- and that uncertainty, that lack of knowing with precision, undermined confidence."

That uncertainty also brings "enormous promise" for building a smarter planet, he said.