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Following is a guest blog from Christopher Caine:

While much has been written and said about President-elect Barack Obama’s statements to invest heavily in the infrastructure of the United States, not enough attention has been given to ensuring we connect our physical and digital infrastructures to create new 21st century systems. We need to make a conscious decision to leap forward, boost productivity, and create comparative advantage for our nation in a global economy.

Though many studies exist about how many jobs can be created by investing in traditional physical infrastructure, none exist for the digital corollary. So, at IBM’s request, the Information Technology and Innovation Foundation (ITIF) conducted a study that showed investing three areas of the nation’s IT infrastructure would yield more than 940,000 new jobs each year.

At the invitation of the incoming U.S. Administration, IBM’s CEO, Sam Palmisano, recently presented the findings and recommendations from this study to Barack Obama’s transition team. I want to share with you a few of the key findings.

Most notably, the study yielded three specific recommendations of where the U.S. Government should invest for maximum, high value job creation: Broadband, Health IT and Smart Energy Grids. Investing $30 billion in these three areas in 2009 would create approximately 949,000 jobs in the United States.  Of those, approximately 525,000 jobs will be in small businesses (defined as firms having fewer than 500 employees).

The graph below outlines these potential results:

Economic Stimulus - Growth Predictions

In each of these areas, the government has an opportunity to make initial seed stimulus investments that offer superior job creation and economic growth benefits because they create what economists call a “network effect.”  This network multiplier arises from new consumer and business behaviors, functionalities, and downstream industries enabled by the IT infrastructure.  For example, traditional public works investment projects, such as building or improving highways, will not likely spur innovations in the auto industry or purchases of better tires for cars.  However, building the smart grid will spur a host of innovative new products and services from hybrid plug-in electric vehicles to smart appliances to more investment in renewable energy.

Given these opportunities, you’ll continue to hear a lot more about these topics – smart grids, healthcare and broadband – from IBM in the near future.

The need is clear. The opportunity is in front of us. The benefits are tremendous. Now, will we have the wisdom to invest in our real future? I believe so.

Christopher caine IBM

Christopher G. Caine,
Vice President, IBM Government Programs

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With the increasing demand for Internet connection, broadband infrastructure will surely give thousands of jobs, whether direct or indirect.

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Investing in infrastructure will really create more jobs from the lowly construction worker to the telecommunication worker especially in the broadband industry.

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August 15, 2010
3:18 pm

Do we know how well the infrastructure investments worked? I suspect that it did work decently to keep us afloat, but that as soon as it stops it will get a little ugly for a while.

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This is the way to do it, investing smart for the future as well, as a renewed infrastructure will have many benefits for future projects as well as creating jobs in the presence.

Posted by: Stian
July 31, 2010
6:48 pm

It amasses me that Information Technology and Innovation Foundation (ITIF) that showed investing three areas of the nation’s IT infrastructure would yield more than 940,000 new jobs each year. I would like to know what areas would be more interesting to invest in.

Posted by: Ron to invest
April 22, 2010
6:20 am

Rater to invest heavily in the infrastructure of the United States by public works energy not enough attention has been given to ensuring we connect our physical and digital infrastructures to create new 21st century systems

Posted by: public works energy
January 16, 2009
1:41 pm

Rob, to answer your question, yes, building a smart grid would definitely cost more than than a one-time $10 billion investment. The $10B is a recommended initial investment for smart grids in the first year.
Based on the data the ITIL pulled for us, a $10 billion investment in smart grids each year for the first 5 years ($50 B total) would yield ~238K net new jobs.

Posted by: Adam Christensen
January 14, 2009
1:31 pm

Is there a way to see some specifics on how the $10 billion would be invested in each of the three sectors mentioned? I have read that building the SmartGrid would be significantly more costly than that.
A sincere thank-you to IBM for creating this forum, and for its efforts in our infra- and eco-structure.

Posted by: Rob Neilley
January 9, 2009
5:23 pm

I think that this is very very well aligned with what C.K. Prahalad said in the past. It was something like:
What you (and your company) is doing to attend the poor people? Almost 70% of the World Wide population lives with very few money. they want to buy good things, but we don’t “format” those things to make it “buyable” by them.
So, looking at the study above, I would dare to ask:
what IBM is doing to be ready to attend the small companies?
Small companies requires special type of things to be done to them. I really think that in the hardware field, we are “A OK”. In this field, we are good (dare to say, awesome).
But what about services? Can we see in the future a (really) Small company buying IT Delivery from IBM? May be, BTO? What about GBS? Are we ready for this?
As global companies are reducing (not in size, but in numbers, since more and more takeovers are happening every day), we really need to be ready to have less big customers and more small customers.

Posted by: André Hiroshi Nishimi
January 7, 2009
2:57 pm

If the government can spot potential growth and implement big infrastructure and multiply returns in jobs and profit, then what is preventing private industry from seeing the light? What secret entrepreneurs does the federal government employ? And, what compels those folks to not make even more profit by building it on their own?
We owe gratitude to the government for inventing the internet, we can give them that. Which has created millions of jobs. But this was a byproduct of doing something else, which is what it is actually in the position to do – building a powerful military and stealing natural resources

Posted by: harpoonflyby
January 7, 2009
4:51 am

I read about the study with great interest. Unfortunately it only focuses on the US-market. Do you have comparable figures e.g. for Europe?

Posted by: Thomas Heimstaedt
January 5, 2009
11:02 pm

Tim, I certainly haven’t forgotten about your request. But thanks for the reminder even so! I’ll be in touch separately very soon.

Posted by: Adam Christensen
January 5, 2009
10:06 pm

I’d sure love to have Sam come to the Web 2.0 Expo in San Francisco April 1-3 to talk with me on the keynote stage about his ideas about smart grids, health IT, and the various other things talked about here. I’ve been reaching out via channels, but haven’t heard anything back. So I thought I’d ask in public!

Posted by: Tim O'Reilly
January 5, 2009
10:02 pm

coverage from the Wall Street Journal: “IBM Chief: IT Investment Will Create Jobs”

Posted by: Tim Washer
January 5, 2009
9:21 pm

Thank you for posting this article. As an IBM’er it makes me very happy that our senior leadership is helping shape the reinvestment in our nations infrastructure and improve lives of Americans. Do we have anyone at that level advising the transition team on Cyber Security and contributing thought leadership in a format similar to the CSIS report? Especially in the area of protecting our current and future power/water/gas SCADA systems.
Chris Ensey

Posted by: Chris Ensey
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February 12, 2011
5:47 am

[...] more: – ASmartPlanet: Investing in smarter infrastructure will create more than 949,000 new jobs in 2009 (by Christopher G. Caine, VP IBM Governments Program) – WSJ: IBM Chief: IT Investment Will Create [...]

Posted by: MQIT on IBM: Invest $30B in Broadband, Health IT, Smart Grid to create 940K jobs « MQIT Corporation
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