Mr. Trump, there’s easily another trillion to remove in technology spend
Dear Mr. Trump:
I heard you mention the pharma industry in your recent press conference. Most US citizens would welcome a significant reduction in drug prices, especially since the rest of the world does so much better for the same or equivalent products. I wished you had mentioned another area which could use plenty of scrutiny — corporate technology spend. I see that several large technology vendors have outlined ways in which they can help the economy save a trillion dollars. The problem is they ideally want us to spend MORE to potentially qualify for those supply chain and other savings. I think we should look at that but also pressure the companies to dramatically lower prices of existing products and services. Otherwise it will be the equivalent of pharma companies saying “let us continue with existing pricing for our older products — we promise to do better with future drugs”
You convened a meeting with executives on many technology vendors. That is a good start. I would request you similarly invite CEOs and CIOs of buying organizations — the GMs, the GEs, government agencies and some small to mid sized companies.
They will tell you
a) Software maintenance on old products introduced even 20–30 years ago is way too over priced. Some customers have moved to third party maintenance at half the cost and much better service levels
b) The data centers many of these vendors provide infrastructure support from should have been retired years ago and yet are priced at many times what Amazon and others are able to deliver in the cloud. And yet as we see again and again our security and uptimes should be so much better for the cost.
c) The MPLS and other networks are priced at many times what you and I pay as consumers per megabit of bandwidth. The pricing of global mobile roaming continues to be outrageous even as the service continues to be spotty as I found during a recent trip around the world
d) The outsourcing services are grossly inefficient. Way too much labor (much of it offshore) which could be automated and delivered much more better
e) Many technology vendors use threats of audits and other predatory behavior to protect gross margins in the high 90s — that’s not a typo
f) I could go on but in my book, SAP Nation I identified hundreds of billions in potential savings around just a small segment of the IT spend.
With some focus every large and small enterprise in the US could shave 2 to 10% of their revenues in IT costs.
Think what the average company could do with those savings. They could invest in more R&D and innovation, they could invest in new plant and equipment — generating tens of thousands of highly desirable STEM jobs.
You have heard the vendor side of the technology pitch. Please now listen to the technology buyer. If we do it right. the economy will get a massive boost even bigger than that from pressure on the pharma sector.