San Francisco '05

Dinner Keynote

Keynote Summary

Bronwyn Guthrie, Vice President, IT Services, Public Sector, IBM Global Services, covers consulting, implementation, operations and maintenance solutions for government, education, and health. She inspired the mostly American audience with a call to action in the context of the global economy.

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I would encourage you to read The World Is Flat by Thomas Friedman, columnist for The New York Times. From the public sector, cities and counties, vendors and service providers in the audience, I think we have an exciting opportunity here to do something important for the U.S. and help us really continue to perpetuate the branding of this country and the world: the can-do culture, the can-do nation. I think this wireless broadband and the enablement it brings can be a major facilitator of that.

One of Friedman’s quotes is from Albert Einstein. “Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty likes opportunity.” We talk constantly today about, Is there a viable business model? Who cares? It doesn’t matter. If someone had said to me a couple of years ago, Is Google a viable business model? No way, it wasn’t what I grew up with. It’s not a normal existing business model. But what’s happening today—lots of talk about Google and EarthLink doing wireless community broadband, and is it free or isn’t it.

This is hard for me, because of my responsibility for the past two decades of generating profit. I live or die by what our quarterly profit results are, so I can contribute when young Sam Palmisano stands up in front of Wall Street and says what we’ve delivered. In terms of what we’re talking about here and what the future of America is, we’ve got to have a substantial number of us who are over that paradigm, who give it up and move on, because you never know what’s going to be tomorrow’s business model. I know I’ve got know idea—because I wouldn’t have picked Google. I wouldn’t have picked eBay and Meg Whitman 10 years ago, but they’ve changed the face of business.

We have a lot of conversation, stress in the trade union, stress for the traditional manufacturers, Wall Street, where we all invest, savings plans, etc.—we’re a different economy now, and there’s a lot of gnashing of teeth about the numbers of jobs that have been outsourced to India and China. Part of what Friedman talks about is, Get over it. If we constantly think about that, we’re a fat nation. China, India, and the related countries coming with them, are based on muscle that are fit to operate to what the future economy will be. I know it’s not related to the topic, but it’s a social driver here.

And an interesting thing that he talks about is, since lifetime employment is a form of fat in the “flat world,” the U.S. simply cannot sustain the notion of lifetime employment. But there is still the requirement of corporate America and government to maintain the concept of a social contract with our constituents and stakeholders—Joe and Sue citizen. There is still a social contract here, one in which government and companies cannot guarantee lifetime employment but should give you the tools to make you more lifetime employable, which then says it’s up to you for individuals to manage their own career and economic security. Government and business will help those workers build the necessary muscle to do that. I think this is vitally important, and out of what I saw today—plus what Riz Khaliq put together for me—I think it’s an important thing for corporate American and government to work together on. Community broadband, wireless enablement, and a number of the things that were spoken to—Tempe, OneCleveland, Atlanta—are all part of that, providing the muscle for individuals, through our education institutions, through social structures, to then do something to make sure that America keeps being the nation that is preoccupied with what we can be and will be—not what we have been.

We’re just at the cusp. I’m fifth-generation Australian. There was a constant preoccupation with what they were, in Britain. Portugal. Italy. Greece. To some extent that’s changing. What you’re all doing here is vitally important to the future of the U.S. I know that’s a weird sort of scene setting, and that’s how I make sense of why we’re here today.

Is there a sustainable business model, or isn’t there? We’ve seen the number of specific instances—different versions—of what is the sustainable model. E-government, the thing that IBM has identified, branded, ourselves in terms of a journey for corporations and government, to become enablers, to become flexible, to have technology and infrastructure as an enabler.

We’re executing in a vision. I think back to the early 1990s, when IBM was doing an experiment on itself and what it meant to be to be a small business—take a really big business and make it horribly small. And Lou Gerstner came in, and said no, we can actually be a big business. One of his things that was part of his personal branding was that he said to the analysts: don’t ask me what my vision or strategy are, I’m just executing. This company needs no more strategy or vision, this company has to execute.

It’s the opposite now. We’re trying to work out what execution is. We’re in the vision. There’s no prior operational model. All this up and down uncertainty—it’s because you’re in a vision.

In terms of the issues: budget constraints, not enough tax dollars, the aging population. What many of our government clients tell us is that they’re very concerned about the percentage of their work force eligible for retirement within the next three years. An astonishingly high percentage. Counterbalancing that is that people in their fifties and sixties and older are grand targets for adopting mobile technology and wireless Internet because it enables them to participate in the work force while embracing the advantages work/life balance, which normally, traditionally, are only afforded to you when you retire. This is an issue that’s also an enabler for us.

Public safety—complete preoccupation with the terrorist threat. Over the past year, we’ve seen overlaying the impact of the natural disasters that have it us.

Economic development—often talked about, but in terms of how we change our position in the global marketplace, I think it’s changed over the past 6 to 12 months, in terms of how you deliver that.

And when we look at what community broadband can do in these challenges that cities, local, state government face—any number of things in terms of an always-on infrastructure does deliver extra productivity, and we have examples of that. It’s not uniform, but we’ve got spot examples of that around the world. The rapid access to information, the ability to keep interoperable networks up—not just in times of crisis but in daily management in a city environment, is crucial and central to why you would implement this technology. The ability to keep some of our most experienced employees engaged in public service and in the corporate environment. I personally think this is going to be a very important factor in keeping skill in the marketplace to run operations as we go forward over the next couple of years.

In terms of economic development, the ability to have an infrastructure that will enable companies to come into an area. We’ve seen the expectation to attract businesses to an area—it’s been on low-cost labor and tax advantages. But now the No. 4 item on the agenda of relocating companies is broadband infrastructure.

Where are we on the e-government journey? I’ve just switched from being an IBM Australia employee to an IBM US employee. To apply for a green card, I need to provide a birth certificate, but I’ve never seen it. Now I can go straight to a government Web site and I can find out exactly what I need to get the certificate. But I still have to print out the form and three pieces of ID and then fax it to Australia. It’s great. I did it. I found out what I had to do. But it was interesting because when I then looked at this chart, I was able to make it personal in terms of where we are versus where the majority of government entities, which is somewhere between waves 2 and 3, in terms of evolving and giving better access, versus embedding technology enablement, wireless and Internet enablement into all our applications. The ultimate goal has actually been not only customer centric, which is providing better services and giving access to information, but being adaptive and having government and public entities showing that they really value their constituents and are being proactive in how we anticipate what your constituents are going to use. And in this bigger world play of how the US remains competitive in a flat world—leveraging technology, increasing value to customers, and then cross-agency collaboration so that you are delivering value to what our overall vision and dream is of what we’re going to be, as China and India evolve. This is an exciting and challenging picture, and different parts of our entities are at different stages of our evolution. It’s an interesting roadmap to use as you look at why you might be doing citywide broadband.

What’s driving the change? There are five areas: The current status of the access technology, which are more voice friendly. Your capacity with your packet networks—3G, 2.5—the abilty to now handle the volume of data and speeds to get into application enablement, we now have the technology that can deliver on the promise of what we’ve been thinking of. In parallel to that are the devices. With WiMAX around the corner, these two related paradigms are becoming bigger energizers of what is possible.

And then the IT environment: As we work to transform the heritage applications and infrastructure to take advantage of the devices, the always on, the workers in the field not having to come back to the offices—you’ve got to have your fundamental apps and data ready to use all this.

What government initiatives? We’ve got the homeland security agenda with dollars behind it. A lot of this is driven from what is you can get your arms around, from digital video surveillance, back into the broadband wireless to make that real. And I think the e-health, e-government, and e-learning area—and we’ve got some examples from around the world that are doing that.

The most interesting is the social agenda. When we have extraordinary levels of suffering put in front of us, we as a culture or society are more likely to be adaptable. We now have social acceptance and readiness for some things that this technology can do that probably didn’t exist a couple of years ago. After the London bombings—the video surveillance network in London, and what the police force was doing with that, and apprehend those people, and show why they were able to identify those people because of the extensive video surveillance network for a long time—I think we’ve got a different appetite in America to take on board and embrace some of the things that will help us fund the financial benefits to enable this technology.

Is government behind it? Yes. George Bush back in 2004 wants broadband available in the country by 2007. Fabulous, I’m glad he said, I’m not sure what’s happened since he said it, but now I’m showing my voting persuasion, and Republicans will be glad I’m not eligible to vote. That’s an acceptable kind of thing to say in Australia. If you look at the I-Win project which is happening—in terms of improving wireless communication because of interdepartmental cooperation at the federal level is funded to the tune of billions of dollars. There are some things happening here. It’s not local, where we live, but are there supposedly at the policy level, initiatives going on—we know we are.

BusinessWeek Magazine, August 1^st chart show 199 US and towns have plans to deploy over the next year, and already 99 have wireless networks. It’s good, but it’s not good enough. South Korea, in 10 years, have gone from having 1 percent of the population with broadband access to 71 percent. They are now No. 1 in the world for broadband access. We have slipped from 11 in 2003, to 16^th today. What the hell is that about? It’s like, give me a break. Even I can’t blame it on George Bush. Well, you go so what, it’s technology—why has South Korea done this? China’s on their border. India next door. They have to find out a way to compete with what’s happening to the flow of money. Since they’ve done that, the citizens are spending twice that in the US for online shopping. The online is 12% of the total retail sales. 66% of the stock trading is online in 2003, compared with 25% in the US. This is just incredible. 30% of the world’s hotspots are in Korea.

The next steps are what we talk about, about the future of technology. This is a wake-up call. We go down, they go from the bottom to the top in 10 years. You take Friedman’s book. Is America going to remain the country of can-do? Or are we going to end up being tomorrow’s Portugal? Talk to the taxi drivers, etc.—60% of the conversations were about how they were great hundreds of years ago.

After today, I’m no longer interested in determining what the right business model is. But if you’re interested in influencing this for the future of the country, work out whether it’s for a government usage model, public-usage model, or a combination of the two. There’s no one size fits all. You need to understand who your constituents are and what your version of the model’s going to be, and get stakeholder buy-in. Decide which one of these: surveillance, emergency response, interoperability, intelligent transport, workforce mobility, economic development. Don’t try to do everything. Work out where stakeholder buy-in, political power, and champions are in your community. Go back to the next level, and work out what your component business model is, and then drive after that. There’s no right answer.

The net driver: the quality of life is higher, and the access to the quality of life is higher. It’s the people at the bottom that provide the energy in this country. Not the Donald Trump’s or the George W’s. But part of what we have to do is make sure, through technology enablement, and what we’re doing through corporations and public entities, is to make that more accessible, even as the cost of education is going up.

What are the applications? Intelligent traffic systems. It’s evolving in Europe. It can be driven by a revenue generation model. Charging certain categories of users on highways a higher amount for premium usage and access on a roadway. There’s some of this going on in southern California. The example we’ve been involved with is actually focusing not on the demand side but the supply side, which is there’s a limitation to the amount of environment degradation and abuse that a community willing to put up with (vehicle exhaust). This is a model of what is in the process of being planned and implemented in the City of Stockholm. It wasn’t driven by the economic development department in the county or city but by the political pragmatism of the person in power, who was elected prime minister. But he had to form a government, and he had to make an arrangement with the green party, and form a government that would do something to reduce the amount of car and lorry congestion in Stockholm, which he did, and part of it was this notion of charging and managing the flow of traffic and access to the city during certain hours. And it’s 100% driven by environment protection, and it’s starting to get legs in other cities in Europe. Given that we’re in California, this needs to have something here.

Surveillance: One of the main drivers of this was linked to event monitoring. We’ve done some partnering with MOMA n NYC, where you can have anything going on, but the surveillance knows when the pictures move. Free movement of people, but you’re not relying on individual points of human failure to make sure your precious asset is safe. In the future, you’ll have certain pattern recognition, and deviation from the ordinary, which means you’ll use wireless in new ways.

Build it and they will come does not always work. The premise under everything I’ve been talking about tonight is to encourage governments to facilitate a community plan. There’s no perfect way to do this, no preordained business model. But the notion of individuals within our local government and community with a certain sense of passion to work out what will be your sustainable business model and get your plan going. There are enough independent consultants or vendor consultants who can help you break down a business model behind this thinking. Prioritize the issues and goals, and then work to set out a plan and get stakeholder buy-in. I would add, Act with a sense of urgency, because the rest of the world is, and I think the potential and opportunity here is enormous. The enablement is enormous, and all our children and our savings plan need you to facilitate this collaboration that’s critical to our future.