Obama Stimulus Bill Effects Will Take Time
Outside of healthcare, broadband and utlities industries, impact of federal spending on IT is unlikely to have an immediate impact.
Thu, May 07, 2009
CIO — The IT provisions of President Obama's stimulus package will pump plenty of cash into the healthcare and broadband industries. But CIOs in other sectors will benefit eventually, analysts say.
For instance, although most of $19.5 billion to modernize health records management will go to healthcare providers and their technology vendors, "any kind of modernization that makes health records more readily available improves the ability to transition across geographies and from doctor to doctor," says Tom Murphy, CIO at AmerisourceBergen, a pharmaceuticals distributor. "That drives more prescriptions into the pipeline, and more volume drives value to our organization."
Such benefits are years away, however. Most of the health IT spending comes in the form of reimbursements, which begin flowing in 2011, says Rob Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a think tank. Atkinson advised the Obama team on the economic impact of technology investments.
The stimulus package also provides $7.2 billion in grants through September 2010 to build out broadband networks in unserved and underserved rural and urban areas. These might increase broadband penetration by 3 to 5 percentage points nationally, Atkinson says. "That's not a large enough number to change corporate strategy" he says, though it will help "at the margin," companies that rely on broadband-enabled customers.
Craig Settles, a broadband analyst and consultant based in Oakland, believes that for some CIOs, the impact will be greater. "High-speed broadband in rural areas with great real estate rates and a high quality of life opens up a strong alternative from the standpoint of outsourced IT services and outsourced call-center activity," Settles says, as opposed to offshore locations. Many companies, including Northrop Grumman, have already set up satellite operations in small-town America. While there are no definitive statistics, he says onshoring to towns that get broadband should become increasingly attractive as wages have risen abroad and as U.S.-based organizations acknowledge that it is easier to manage workers who are closer to home.
Green IT and Tax Breaks
The stimulus is also expected to increase corporate spending on green IT. The package provides for $11 billion for a smart electrical grid and $4.5 billion for greening office buildings.
The smart grid money will go to utilities and their IT vendors, but the grid itself, as well as the money for greening buildings, should influence companies in all industries to optimize power usage, says Todd Thibodeaux, CEO of CompTIA, a trade association. And that will affect how they purchase and manage everything from data farms to desktop PCs. "There'll be increasing visibility and awareness when companies put up new buildings and new facilities. "
Another provision extends accelerated capital depreciation allowances through the end of 2009 for businesses that buy less than $800,000 of equipment. Businesses can depreciate purchases of up to $250,000, about double the normal amount. All companies, even large ones, may depreciate half of the cost of certain capital purchases during the first year.
These tax breaks allows CIOs to make investments that might otherwise be too costly. At least for now. "It's a short-term shot in the arm to get purchases moving." Thibodeaux says.
Joan Indiana Rigdon is a freelance writer based in Maryland.