The American dream is in peril from the confluence of sky rocketing deficits, high unemployment, and the ticking time bomb of an aging baby boomer generation, with its coincident increase in the burden of entitlements as a percentage of GDP. For the first time, the next generation of Americans, our grandchildren, risk having a lower standard of living than we enjoyed. It is not a problem that can be remedied with tax increases and budget reductions. We will not save or cut our way back to economic prosperity.
The way forward is innovation. America must innovate its way out of economic stagnation and back to economic growth. As has been the case for the last 150 years, Americans have always responded well in a crisis and yet again, we are well positioned to lead the world out of this one. Want proof?
American businesses systemically and culturally react fast. Two years after the economic downturn began the United States was generating 97% of its economic output with only 90% of the labor. This sort of gain in productivity ultimately translates into increased economic activity, the ability to pay down debt and a higher standard of living for those of us who are employed. Unfortunately it does not directly address the issue of unemployment.
The fact is that productivity gains from working harder can only take us so far. Innovation and technology can and must take us the rest of the way, creating new jobs and new industries. Our "so called" information economy, for example, is ripe for innovation. Today, all organizations are dependent on information technology. What makes me optimistic about the future is that we have not even begun to scratch the surface of all that can be accomplished by actually applying information technology pervasively.
We have spent trillions of dollars worldwide for the computers to create and process information, networks to move it around and the hardware to store it. But we are at a point where we spend 60 to 70% of "IT" budgets just to maintain those systems and infrastructures. No wonder progress in applying IT is so slow. This is the technology equivalent of every organization in the world, big or small, investing the capital and human resources to build and operate their own electricity producing power plants.
But instead, picture a world where software platforms are available online and easily customizable. Picture a world where compute power is generated off site, available in quantities when and where you need it. And picture a world where information is safely stored, efficiently managed and accessible, when and where you need it.
These are cloud infrastructures. The economies of scale, flexibility and efficiency they offer will not only save organizations massive amounts of capital and maintenance costs but emancipate them to apply and use information as never before. An unbelievable opportunity to raise productivity while creating unprecedented opportunities for businesses and workers.
Now picture a health-care system where a doctor has medical records at his fingertips, can see x-rays with the click of a mouse, is able to learn and apply the latest diagnostic and surgical technique from anywhere in the world. Think of the efficiencies in hospital supply chains, the delivery of prescription drugs, the processing of billing and insurance claims, reductions in fraud, and the application of best practices for cost controls. The capacity for improvement is endless. As a matter of fact, these innovations are already being applied in isolated pockets. But for us to seize the opportunity before us it's imperative that we move from isolated centers of excellence to connected systems of excellence. Pick any industry and systemic improvements like these are available.
A new age of innovation and technology advancement is within our grasp – an opportunity for job creation, greater productivity and economic growth. The time for cloud computing is now. We need government and industry to accelerate broad scale adoption of cloud infrastructures so we can reap the rewards of a true information based economy.
As I said at the outset, Americans respond well in a crisis. It is the nature of our society: egalitarian, free, open and competitive that make us the most adaptive, inventive and resilient country in the world. Time again for us to lead.
Art Coviello is executive chairman of RSA, a division of EMC.
Thanks to Art Coviello / Blogs Forbes / CIO Central / CIO Network
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