what will happen next? (and will we like it?) will happen next? (and will we like it?) gary bridge,...

© 2005 Cisco Systems, Inc. All rights reserved. IBSG - 1

What Will Happen Next?(And Will We Like It?)

Gary Bridge, Ph.D.Senior Vice PresidentInternet Business Solutions Group


Three Factors Drive Change

Dem

ogra

phic

s Technology

Economy

Culture

IBSG - 2


The industrialized world faces a Productivity Imperative

• A Demographic Crunch is coming . . .

• More retired people, and fewer workers means . . .

• Workers must be more productive than today’s workers, or our standard of living will erode dramatically

Point #1


European Union: Population AgingEU

>65

Yrs

. Old

EU

>65

Yrs

. Old

00

2020

4040

6060

8080

100100

120120

61.8M61.8M

103M103M

60% increase

60% increase

20002000 20502050

Source: FT, 4 Oct. 2003


European Union: 2000 vs. 2050

WorkersWorkers

RetiredRetired

5:15:1 2:12:1

243M243M203M203M

-16% decline-16%

decline

EU A

dult

Popu

latio

nEU

Adu

lt Po

pula

tion

0%0%10%10%20%20%30%30%40%40%50%50%60%60%70%70%80%80%90%90%

100%100%

20002000 20502050

Source: The New York Times, April 4, 2004


“Too many retirees in China, and not enough young people to replace them.”

Because of Birth RestrictionsChina Faces a GrowingProductivity Imperative –Fewer Workers per Retiree

Because of Birth RestrictionsChina Faces a GrowingProductivity Imperative –Fewer Workers per Retiree

THE MATH IS SIMPLENumber of workersNumber of retireesLongevity of retirees

? Productivity per worker


Question:What are our policy options?

Cut benefitsAnswer:

OR grow productivity


Delay Retirement

Early Retirement62Reduced Benefits

Early Retirement62Reduced Benefits

6868

Regular Retirement65Full Benefits

Regular Retirement65Full Benefits

7272

Source: Fortune, 2004, report ofSocial Security Admin. analysis Photo: Economist, 2004


Reduce Benefits

27% decreasein benefits

Source: Fortune, 2004, analysis of Social Security Admin. report

Example: Ration healthcare at end-of-life

20% of patients consume80% of all healthcarespending

Source: Hewitt AssociatesDefined Care 2003 Summit

1/3 of lifetime medical spendingoccurs in the last 5 years of life.80% of that spending is in last 30 days of life, therefore 25% of lifetime spending is for last month of life

Source: Hewitt Associates, 2003 Healthcare Web Summit


Rationing Is Reality Already

Source: Wall Street Journal, 22 November 2005


Raise Current Workers’ TaxesWorkers’ social security taxes for current retireesmust increase or pensions must be cut drastically

Year

Perc

ent o

f Tax

able

Pay

roll

Paid OutPaid Out

BalanceBalance

20032003 20132013 20232023 20332033 20432043 20532053 20632063 20732073-10-10

-5-5

55

1010

1515

2020

00

Source: Social Security Administration

Social Security Income RateSocial Security Income Rate

Social Security BalanceSocial Security Balance

Social Security Cost RateSocial Security Cost Rate


Grow Productivity Faster

To simply stay in place, workerswill have to produce 2.5X more per hourthan they do today

1

To continue the living standard improvements that Americans haveenjoyed since 1948, each 2050 worker will have to produce 5X more than a worker today

3X

4X

5X

20502005Source: Cisco IBSG Analysis


Productivity Gap: UK Illustration

100

90

120

110

80

Productivity Index

20011995 1997 1999

Government productivity flat while private sector grows

Gap

Government Services ProductivityGovernment Services Productivity

Overall Services ProductivityOverall Services Productivity

Source: McKinsey Quarterly, Dec 2004, OECD, U.K. National Statistics Office, Latest Available Data


• IT investments drive productivity gains

• How IT solutions are implemented makes a big difference in results

• Organizational issues, not technology, pose the biggest challenge to productivity

Point #2


What Drives Productivity?

Contribution to Long-term Productivity Growth of 2.2%

1.15%Technological Change and Other Factors

1.15%Technological Change and Other Factors

0.23%ImprovedLabor Quality

0.23%ImprovedLabor Quality

0.82%Capital

Investment

0.82%Capital

Investment

*Average Annual Rate 1948-2001*Average Annual Rate 1948-2001 Data: US Bureau of Labor StatisticsData: US Bureau of Labor Statistics

52%52%


E-Government Continuum

Mobility

RemoteService Delivery

Co-production of Value

Self-Service

StaticInformation


• Self-service raises productivity

• RFID technology facilitates self-service

• We know how to motivate self-service behavior

• Redeploy the labor saved to create new value for citizens

Point #3


Filing Electronic Tax Returns

Requires private sector enablement:Four software companies account for 80% of the filings


US e-Filing Tax Returns

46.8%

0%

10%

20%

30%

40%

50%

Perc

ent o

f All

Ret

urns

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Source: irs.gov/taxstats


Automating Labor Out of Retailing

Bar Codes

1974

RFID Tags

Pallet-level

2005


Automated Scales for Produce

Scale automatically recognizes product, prints bar code label

Enables self-service check out

Faster, cheaper

Photo: Joe Reilly, Metro Group, Future Store


Checkout Automation

Rule of thumb: 2.6 agents instead of 4 Photo: Metro Group, Future Store


Redeploy Labor to Create Value

Photo: Gary Bridge, Metro Group, Future Store


Barriers to Co-Production

BarriersBarriers SolutionsSolutions• Do not know what to do

• There is a simpler way to do it

• Citizens are not motivated

• Lack knowledge or skill

Tell them

Change it

Reward them

Teach them

Source: Honebein and Cammarano, 2005


Barriers to Co-Production

BarriersBarriers SolutionsSolutions

Redeploy laborShare gains

• Worker resistance

There will be noalternative whenDemographic Crunch hits


Citizens, Private Enterprise and Non-Government Organizations will generate valued public services, if Government provides the proper environment for collaboration

Point #4


Victims Find Information Online



How Can Government Harness Citizens’ Talents and Interests?

• Disaster response

• Surveillance, public safety reporting

• Land use monitoring

• Pollution monitoring

• Water conservation, water quality


State of Texas Streamlines Services for People in Need

• Challenge:Consolidate disparate systems whilereducing costs and providing better services for citizens

• Solution: 2-1-1 Call CenterDirect, transparent access to health and human services for all Texas citizens—never closed

• Results:Shorter waiting time for benefit recipients and lower administrative costsAnticipated savings of US$400K per yearover the cost of a traditional call-center


Help in Time of Crisis

• Texas 2-1-1 system assisted more than 170,000 callersafter Katrina hit

• Calls went from 2,500 daily to 10,000• Quickly added 200 statewide 2-1-1 agents


Where to Invest

• Invest in infrastructure that citizens can use to produce public benefits

• Set standards – define the path forward

• Invest in collaboration -- information allows groups to coordinate their activities

• Provide knowledge management -- best practices


“The Death of Distance”• Complex services can be

delivered remotely

• That provides access for more citizens

• But also allows jobs to be exported

Point #5


Evolution of Transportation -- SpeedTransatlantic CrossingsTransatlantic Crossings

Sirius, first transatlantic

crossing under continuous steam

power

Sirius, first transatlantic

crossing under continuous steam

power

London to New York

via Concorde

supersonic jet

London to New York

via Concorde

supersonic jet

The Queen Mary

The Queen Mary

Mayflowersailing ship Mayflower

sailing ship

London to New

York via space travel

London to New

York via space travelH

ours

–Lo

g Sc

ale

1212

9696

360360

1,5831,583

3.53.5

.75.750

1

10

100

1,000

10,000

1620 1838 1936 1945 1977 2015

Washington to Paris via Lockheed

Constellation airplane

Washington to Paris via Lockheed

Constellation airplane

23%23%

27%27%

13%13%

29%29%21%21%

Year

http://www.vrcurassow.com/2dvrc/sscuracao/sirius.jpg

http://images.google.com/imgres?imgurl=http://www.fai.org/press_releases/2003/images/concorde.jpg&imgrefurl=http://www.fai.org/news_archives/fai/2003_10.asp&h=152&w=300&sz=37&tbnid=VJomQs_WOFsJ:&tbnh=56&tbnw=110&start=161&prev=/images%3Fq%3Dconcorde%26start%3D160%26svnum%3D100%26hl%3Den%26lr%3D%26sa%3DN

http://images.google.com/imgres?imgurl=http://www.seeing-stars.com/Images/Slides/QueenMary.JPG&imgrefurl=http://www.seeing-stars.com/ImagePages/QueenMaryPhoto.shtml&h=300&w=450&sz=29&tbnid=o2TCQQUc2VoJ:&tbnh=82&tbnw=123&start=211&prev=/images%3Fq%3Dqueen%2Bmary%26start%3D200%26svnum%3D100%26hl%3Den%26lr%3D%26sa%3DN

http://images.google.com/imgres?imgurl=http://www.minehara.com/musikit/images/mayflower.jpg&imgrefurl=http://www.minehara.com/musikit/mtdulkit.htm&h=329&w=317&sz=22&tbnid=U-8ElZQk91UJ:&tbnh=113&tbnw=109&start=5&prev=/images%3Fq%3Dmayflower%26svnum%3D100%26hl%3Den%26lr%3D


Nonstop Flights between Any Two CitiesHong Kong London

Compare: 1930’s –1940’s London to SydneyClipper Ship Flying Boat10 days (~240 hours)32 stops

Source: Wall Street Journal, 11 Nov. 2005


Establishment of the World's First Telerobotic Remote Surgery

• The environment is created to immerse the surgeon in the atmosphere of the operating room

• Two large-screen televisions bring images of the operating room

• The two surgeons are also in constant communicationusing wireless headsets

Source: Medscape: September 2003


eICU Remote Monitoring

• Telemedicine transforms ICU care

• Early warning software and electronic monitoringconnected to off-site critical care

• Physician specialists (“intensivists”) and critical care nurses monitor ICU patients constantly

Source: Visicu 2005


Remote Airport Monitoring

Send X-ray images to scanners in central facility


Mobility raises productivity

The Mobility Goal:• The right information

• For the right person

• At the right time

• On the right device (format)

• Securely

Point #6


Mobile Growing, Wireline Declining

0100200300400500600700800

1,000

1,300

1,100

900

1,200

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Minutes(In Billions)

600.

500

400

300

200

100

0

Number of LocalWireline Calls(in Billions)

Wireless Interstate Wireline Switched Access

Source: FCC Trends in Telephone Service Report, June 2005, and the Yankee Group 2005 North America Wireless/Mobile Carrier Tracker


Mobile Phones Help Indian Fishing Boats Maximize Value of Catch

Mobile phones allow fishermen to negotiate prices before reaching shore

Communications drive an efficient market – value of catch is maximized by auctioning among nearby ports

Source: Network Magazine August 2005, Express Computer June 2003


World Internet Users and Population Use will reflect world population


Growing Number of Remote Workers

60% lower costs to support remote worker

Appeals to youngerworkers, who seek flexibility

Success depends onrole and expectations

Source: BusinessWeek, 12 Dec. 2005


• Disasters and crises are occurring more frequently

• Constitutional government requires continuity of operations

• Mobility contributes to continuity of operations

Point #7


US Federal Continuity Initiatives

• CivilianContinuity of Operations Plan (COOP)

Enduring Constitutional Government (ECG)

Continuity of Government Operations (CGO)

• DefenseDefense Continuity Program (DCP)


US Federal Continuity Initiatives

40% of US Gov’tofficials expect

dirty bomb attackwithin next 10 years

National Counterterrorism Center,2005

0

100

200

300

400

500

600

700

800

1994-1998 1999-2003

Average Disastersper Year

Center for Research on Epidemiologyof Disasters, 2005

428

707• Civilian

Continuity of Operations Plan (COOP)

Enduring Constitutional Government (ECG)

Continuity of Government Operations (CGO)

• DefenseDefense Continuity Program (DCP)


Continuity Requires Integrated Technologies Across Organization

Workforce ResilienceWorkforce Resilience

Communication Resilience

Communication Resilience

Application Resilience

Application Resilience

Network ResilienceNetwork

ResilienceIn

tegr

ated

Sec

urity

Inte

grat

ed S

ecur

ity

Continuity of Operations

Continuity of OperationsWhat is Required?What is Required?

WorkersAllow key staff to perform functions under various threat conditions

WorkersAllow key staff to perform functions under various threat conditions

CommunicationsMaintain critical communications within and between agencies and to customers and public

CommunicationsMaintain critical communications within and between agencies and to customers and public

InformationProtect and enable critical information systems, applications, and records to support agency functions

InformationProtect and enable critical information systems, applications, and records to support agency functions


Question:Is a worldwide pandemic coming?

Answer:Yes, but timing and severity are unclear


Historic Lessons: 1918, 1957, 1968

1918 Influenza Pandemic 50+ Million Dead

Scaled to 2005 population200+ Million Dead

1918 Population = 1.6B2005 Population = 6.5B

4X Larger

23 MillionAIDS deaths

since recognized in 1981

23 MillionAIDS deaths

since recognized in 1981


Zoonoses Danger Is Greater TodayDiseases that can jump from animals to humans

• Larger populationWorld population 1918 = 1.6B, today’s 6.5B

• More pigs and poultry, which are the virus reservoir

Pigs China 5.2M 508M

Poultry China 12.3M 13B

• More physical connections between populations

• Inadequate surveillance systemOnly half countries participate in WHO monitoring, and wide areas of many participating countries are not covered

1968 2005


European Influenza SurveillanceSpread Intensity

Source: http://www.eiss.org/cgi-files/bulletin


Coming Pandemic?H5N1H9N2H7N7

Current Concern

World population = 6.5 BillionVaccine Available = 0.3 – 0.5 Billion dosesPotential population = 6.0 BillionExposure rate = ~ .50If exposed, Fatality rate = ~ .50*Potential deaths = ~1.5 Billion

1 in 4.3 people


1 in 4.3 people* Calculated from Viet Nam, Cambodia, Thailand H5N1 data

Science, 15 July 2005


Coming Pandemic?H5N1H9N2H7N7

Current Concern

Intervene HereIntervene Here


1 in 4.3 people


1 in 4.3 people* Calculated from Viet Nam, Cambodia, Thailand H5N1 data



Coming Pandemic?

Intervene HereIntervene Here

World population = 6.5 BillionVaccine Available = 0.3 – 0.5 Billion dosesPotential population = 6.0 BillionExposure rate = ~ .50If exposed, Fatality rate = ~ .50*Potential deaths =

World population = 6.5 BillionVaccine Available = 0.3 – 0.5 Billion dosesPotential population = 6.0 BillionExposure rate = ~ .50If exposed, Fatality rate = ~ .50*Potential deaths =

H5N1H9N2H7N7

Current Concern

To limit deathsto 200 millionrequires <7%

exposure* Calculated from Viet Nam, Cambodia, Thailand H5N1 data



Avian Influenza: Government Impact

MILDOUTBREAK PANDEMIC

• Government expenses rise• Tax collections fall• 1 – 2 year recovery period

• Expenses rise dramatically• Taxes fall dramatically• Long recovery period• Major shift in political

power due to changing demographics


Avian Influenza: Economic Impact

PANDEMIC

• Fundamentals deteriorate• Raw material prices collapse• Interest rates fall• Severe price deflation• Stocks fall in travel, hotels• Stocks rise in healthcare,

pharma, cleaning products, telecommunications, internet-related companies

Source: Citigroup analysis, Wall Street Journal 25 Nov. 2005

MILDOUTBREAK

• Slower economic growth• Stocks fall: 10 – 20% within 6

weeks for hotels, banks, materials, industrials, travel

• Price deflation• Rebound within year


SARs: Lessons LearnedSEVERE ACUTE RESPITORY SYNDROME (SARS)• Began in Guandong Province, China,

Feb. 2003• 8,000 people stricken in one year• 10% fatality rate

Global effortto ISOLATE

Infected people


SARs Outbreak: Cisco China ResponseSEVERE ACUTE RESPITORY SYNDROME (SARS)• Began in Guandong Province, China,

Feb. 2003• 8,000 people stricken in one year• 10% fatality rate

MOBILITYMOBILITY

• Home Broadband access• Wireless home networks• E-mail• IP Softphone• Instant Messaging• Collaboration• Video

• Home Broadband access• Wireless home networks• E-mail• IP Softphone• Instant Messaging• Collaboration• Video


SECURITY


There are no bystanders

What happens next depends on the decisions that governments, enterprises, and individuals make today

Point #8


Conclusions

1. The Productivity Imperative is real2. Co-production of public value will grow3. Infrastructure and collaboration

investments foster citizen co-production4. Remote delivery of services improves

productivity5. Worker mobility improves productivity6. Mobility provides continuity of operations

what will happen next? (and will we like it?) will happen next? (and will we like it?) gary bridge,...

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