Blogger: Lyn Robison
For years, the political leaders of the United States (in both parties) have pandered to the wants of the electorate with reckless abandon, and as a result, the federal government now faces perilous budget deficits. The good news is that, as incredible as it sounds, enterprise IT has actually contributed in the past to solving this problem by significantly increasing the productivity of the U.S. economy. I will explain how in a moment, but first let’s review the bad news.
A recent article in the New York Times entitled, “America’s Sea of Red Ink Was Years in the Making” quotes Alan Auerbach, an economist at U. C. Berkeley, who says, “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it. And,” he added, “not fixing it is, in a sense, making it worse.” The article continues, “What, then, will happen? ‘Things will get worse gradually,’ Mr. Auerbach predicts, ‘unless they get worse quickly.’ Either a solution will be put off, or foreign lenders, spooked by the rising debt, will send interest rates higher and create a crisis.” The article also states, “That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.”
Fortune magazine recently published an article entitled, “The next great crisis: America's debt”. The article states, “Within a decade the average household that pays income tax will owe the equivalent of $155,000 in federal debt, about $90,000 more than last year.” It goes on to say, “It can't go on forever, and it won't. What will shock America into action is the prospect of fiscal collapse, which will grow more vivid each year.” The article paints a bleak future in which big entitlements frustrate any real prospect of reducing the deficits. Our future looks bleak, and there appears to be no way to avoid it.
One hopeful note in this bleak picture of our collective futures is the positive impact that enterprise IT had on the U.S. economy during the 1990s. On April 5, 2000, in an address entitled "Technological innovation and the economy", Alan Greenspan basically gave enterprise IT the credit for the largest economic expansion on record. He asserted that “something profoundly different from the typical postwar business cycle has emerged in recent years. Not only has the expansion reached record length, but it has done so with far stronger-than-expected economic growth ... While there are various competing explanations for an economy that is in many respects without precedent in our annals, the most compelling appears to be the extraordinary surge in technological innovation that developed through the latter decades of the last century.” Mr. Greenspan explains that IT (specifically, ERP systems) succeeded in the 90s in materially reducing “large swaths of inventory safety stocks and worker redundancies”. He observed, “In short, information technology raises output per hour in the total economy principally by reducing hours worked on activities needed to guard productive processes against the unknown and the unanticipated.” During the 1990s, we used enterprise IT to innovate our way to economic prosperity.
That innovation really worked. Federal tax revenue increased during most of the 90s, and the federal government actually ran a surplus in 1999 and 2000. The CBO estimated then that the government would run surpluses of more than $800 billion per year from 2009 to 2012. (Unfortunately, the government will actually run a $1.2 trillion annual deficit instead: a $2 trillion swing in the wrong direction. A little more than a third of that negative $2 trillion came from an economic downturn, a third came from legislation signed by President Bush, and a little less than a third will come from President Obama’s extension of several Bush policies, the stimulus bill, and Mr. Obama’s agenda on health care, education, energy and other areas.)
My point in all of this is that enterprise IT accounted for vast increases in the output and efficiency of the U.S. economy during the 90s. We innovated our way to economic prosperity once -- perhaps we can do it again. Doing so will require another “extraordinary surge in technological innovation”.
Mr. Greenspan referred to a “revolution in information availability” that occurred during the 1990s, which makes me believe that the technological innovation we seek will not come through technology technology, but rather through information technology. IOW, our technological innovation needs to bring about another revolution in information availability.
In my blog post A Crystal Ball shows the Future of IT, and it is … Detroit?!, I predicted that enterprise IT will face the same fate as the American automotive industry if enterprise IT continues to focus on the production of technology instead of the production of information. I stand by that prediction, and Mr. Greenspan’s comments about the 90’s “revolution in information availability” seem to harmonize with my assertion about the importance of information. Now, I hereby predict that enterprise IT can indeed revive the entire U.S. economy and avert a federal budget disaster if enterprise IT will focus on the production and delivery of useful information to the businesspeople who need it to make decisions and do their jobs.
This revolution in information availability needs to be the opposite of the failure in information availability that I delineated in my Smoking Gun blog post, which materially contributed to the subprime mortgage crises, whose ripple effects precipitated the current recession.
The 1990’s revolution in information availability came as a result of the conquest of data silos in the supply chain. The next revolution in information availability will come as a result of the conquest of data silos throughout the enterprise.
The conquest of data silos should be paramount in the minds of enterprise IT leadership and staff. At Burton Group’s Data Management Strategies service, overcoming data silos is paramount in our minds, and we are providing guidance to that effect. We recently published an overview entitled “The Methodology for Overcoming Data Silos (MODS): Using the New XQuery Development Stack” and we will soon publish another overview entitled “Delivering Integrated Information from Data Silos Using MODS”. These overviews point the direction of the innovation that enterprise IT must pursue for its own sake and for the sake of the economy at large.