4 Major Steps to Transform the Country Using Data Analytics

IBM CEO Sam Palmisano says using data starting at the state level can make the U.S. more competitive globally.

by / October 8, 2010
IBM CEO Sam Palmisano

We all know about the fiscal crisis in our states. America’s states have all of the costs and problems of the present recession, and none of the monetary tools available to the federal government to address them. Some have even called our country “the broken states of America.”

But I believe that the state is the best place to change the game. It’s at the state level that many of the systems we depend on as citizens and businesses come together. By tackling these systems in a unified way — by making them smarter — we not only repair what’s broken, but also prepare for the new global economy that lies on the other side of the current economic crisis.

“Smarter” means using the abundant and affordable technology that’s available. Through these new capabilities, we can transform everything from physical infrastructure, like roadways and power grids, to complex services, like health care and crime fighting.

The key is not the network, data center, sensor, router or any other device — it’s not even the software, per se. It’s the data. By capturing data in unprecedented volumes through broad instrumentation and interconnection, and by parsing it with advanced analytic tools, we can now know with confidence and accuracy what’s happening in these systems. And that lets us make them more efficient and effective.

In state after state, forward-thinking CIOs are already seizing upon these new capabilities and applying their ingenuity and coalition-building skills to drive transformative change.

In California, Alameda County Social Services is using advanced analytics, real-time reporting and dashboards, which enables caseworkers to find the immediate status of any child, as well as the staff members, support services and programs associated with that child. Reports are generated in minutes, rather than weeks or months, and more than $11 million has been saved through greater efficiency.  

North Carolina uses analytics to combat Medicaid abuse and has netted more than $20 million in just five months. New York state has saved more than $1 billion in 10 years with an analytics program designed to spot tax cheats.

The list could go on. And there’s no reason this critical work cannot continue, even during times of transition — such as the one that will come next year, when more than two dozen new governors take office following November’s elections. It must continue because making state systems smarter isn’t just about long-term benefits. A smarter government has immediate payback. For example, these approaches can ease the burden of growing Medicaid costs. And smarter technologies are already helping states experiencing financial losses because of tax and health-care fraud.  

I believe our governors can seize this moment as a unique opportunity for transformation. It will require four major steps.
First, we must establish data standards for all the critical systems of our states — from energy, to health care, education, transportation, public safety and more. And it’s essential that those standards be open. That’s the only way all the different systems of a smarter state can communicate.

Second, we need to build smarter states by design. The qualities of a well functioning system of government operations — security, reliability, efficiency, citizen focus and more — cannot be “bolted on” after the fact. Many leaders are realizing this as they actively redesign state government by building key criteria like interconnectivity, data analysis and security into their state’s operations.

Third, a smarter state will enable — and require — far more collaboration. I’m not just talking about the familiar idea of private sector-public sector “cooperation.” A diverse, multi-stakeholder world requires all parties working together, shoulder-to-shoulder, in a thoughtful, structured way.  

One good example is the Vermont Blueprint for Health, which helps primary care providers operate their practices as patient-centered “medical homes,” connected across the state’s health-care ecosystem through a health information exchange network. The pilot is being financed as a shared resource by employers like IBM.

Finally, a smarter state requires serious consideration of some important policy implications. For instance, while cameras placed around a city can alert police and other first responders to emergencies far faster and more precisely than ever before — helping save lives — they also raise questions about the use of public versus private information. Leaders and stakeholders from across civil society must come together around clear guidelines on how to manage the data now available to us, to enhance both the security and prosperity of our states and communities, and the rights of individual citizens.

These approaches are practical and happily nonideological. Yes, debates will continue to rage on many contentious issues — from health care, to energy, security and climate change. But no matter which viewpoints ultimately prevail, the systems that result will have to be smarter — more transparent, efficient, accessible, resilient and innovative.

To get there, I believe our states’ leaders — in particular CIOs and their peers across the public and private sectors — must take a leadership role. And here’s the good news: We don’t have to wait for the federal government before starting. As the examples above show, there are myriad opportunities to start today.

Seizing on those opportunities, I believe that some states are going to turn health care into a true system designed with the patient’s health in mind. Some states are going to put in place the key building blocks for smarter education. Some states are going to institute standards, accomplish cross-segment connectivity and break down the silos across governments at all levels. Some states are going to unleash — and scale — the expertise and creativity of America’s local communities. And more and more states are going to build the capacity to identify the key patterns in all this data and knowledge.

The state CIOs who lead these efforts are going to drive incredible progress and economic growth in their states — and for America as a whole.

In the end, the key to America’s long-term global competitiveness isn’t technology. It’s leadership. And the state level is where we have the greatest opportunity to bring the complex systems of 21st-century America together. Despite the challenges we face, I am confident that governors, their state CIOs and legislatures across America will do what leaders do — lead. I believe we can build a nation of smarter states.


Sam Palmisano
Sam Palmisano is Chairman and CEO of IBM.