May 1st, 2009
Tech vendors: We're ready to help you spend Obama's stimulus money
If you don’t think tech will be one of the first sectors to recover from the current economic conditions, think again.
Technology taps into pretty much every sector out there - from manufacturing and health care to education and energy. Many of the businesses in those sectors have their own data centers, run software applications, handle sensitive data and depend on a constant connection. Increasingly, their IT departments - like so many others - are strapped for cash and resources and spend the majority of their time just keeping the engine humming. There’s little left for investment in technology that could save money but also give them a competitive edge.
But now, with federal funds from the American Recovery and Reinvestment Act getting ready to flow, the tech sector is looking to get its hands on as much of it as possible.
Consider announcements this week from IBM and Dell:
- IBM has added a “significant financing component” to its ARRA-related offerings. IBM Global Financing is making up to $2 billion available to finance “IT initiatives in key economic stimulus areas.”
- Dell released the findings of a survey that concluded that a large chunk of the public sector could use some schooling on the flow and impact of ARRA funds. Among public-sector IT professionals surveyed, 78 percent said ARRA-related information is “non-existent, too generic or not understandable.” To help those folks gain a better understanding (and steer them toward Dell solutions), the company has launched an online Economic Stimulus Learning Center.
To recap: The American Recovery and Reinvestment Act is intended to stimulate investments in key areas with the goal of not only saving or creating jobs but also “laying the groundwork” for long-term economic growth. Much of that is going toward “infrastructure,” including the tech backbones that power many of the nation’s various business sectors. The funds will be broken down as follows:
(Source: Recovery.gov)
To get any idea of what that means, consider Dell’s outlook on offerings for the public sector:
IT solutions that would help address public-sector challenges and warrant ARRA funding include modernized, “intelligent classrooms,” for K-12 organizations; standards based high-performance computing platforms for university research environments; energy-efficient products and low-touch services for government customers, and standardized, interoperable IT for healthcare environments, including electronic medical records.
If there’s funding attached tech vendors will have an angle. Earlier this month, an article in The Four Hundred newsletter - published by a site called IT Jungle - took a closer look at the impact of the stimulus plan on IT. In it, author Dan Burger notes that, despite the rumblings about the economic plan and the debt that it’s creating, few are questioning that the IT industry will benefit from it. He writes:
IDC estimates $101.2 billion will be spent on technology during the next five years thanks to ARRA. That figure includes things that are not related to information technology, and it also includes multiplier effects of the IT investments that the Federal government is underwriting and the consequent and follow-on IT spending that will result from those investments. (Think of it as the Wal-Mart effect. Once Wal-Mart embraced RFID technology, its suppliers had to, and that meant spending lots of dough on RFID hardware and software.)
In the piece, Burger cites IDC figures that note the ripple effect on tech spending. The $40 billion or so targeted at the energy industry could stimulate about $77.6 billion in tech spending. The health industry, with its $21.1 billion bump, is sure to turn to tech solutions for deployment of electronic medical records. The key is to make sure that the investments are effective and can stimulate even more growth for the industries. He further notes:
Areas such as electronic health records and the administration of Social Security benefits, to name just two, will be under the microscope. Whether they prove to be wonderful examples of the benefits of IT progress or just the opposite, the ripple effect in the private sector will be substantial.
And tech vendors will be looking to capture every ripple they can.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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