IT Spending's Role in the Economy

Published on November 13, 2009
by Lauren Goode

Efforts to reform the U.S. health-care and bank lending systems are likely to lead to an increase in information-technology spending, said one potential beneficiary, Sudhakar Ram, chairman of IT firm Mastek.

Overhauling the country’s IT systems could cost as much as $250 billion to $300 billion over five to seven years, he said in an interview. In addition, he estimated that electronic health records will cost some $150 billion to $200 billion under the Obama administration’s health-care initiatives ($20 billion of stimulus funds have already gone toward the project).

Stronger systems might have mitigated last year’s economic turmoil, Mr. Ram said. “The subprime crisis started with poor controls at the loan origination process, which a halfway decent loan-origination system should have trapped,” he said. “The core systems are several decades old and written in outdated programming languages.”

That’s like blaming superhighways for traffic jams, said Andrew Bartels, an analyst at Forrester Research (FORR) who studies tech-spending trends.

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