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IBM lubricates Obama's IT stimulus

Fronts $2bn for 'smart infrastructure'

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For US companies, state and local governments, and educational institutions, figuring out how to get a piece of the Obama $787bn stimulus package is a drag - and a drag on business.

And so, IBM has announced that it is fronting $2bn of its own financing in an effort to speed up IT-related projects that come under the American Recovery and Reinvestment Act (ARRA). IT projects comprise about $35bn in total spending over the life of the act.

IBM was focusing on key IT stimulus areas even before Barack Obama was elected president last fall, and many made it into the ARRA funding, including smart electric grids, healthcare IT systems, and increased broadband Internet access. IBM wants to speed up the process and let customers finance the IT portions of these projects now, as they chase the funds to do the projects from Uncle Sam or the states or agencies that are being given control of the ARRA funds.

The $2bn is not just a not a lump sum of cash dedicated to ARRA projects, but rather the value, as calculated by Big Blue, of lower finance rates, more flexible payment, and deferred payment plan options it is giving to those engaging in ARRA-backed projects as well as the structured lines of credit.

IBM says that it is tweaking financing packages so the payment schedules and amounts for ARRA projects align to the payment streams that government, educational, and corporate institutions expected to receive as stimulus funds are released. By the way, the ARRA financing plans can be used for the purchase of IBM hardware, software, and services as well as those from its rivals - IBM Global Financing just wants to get its interest, like any other bank.

While the idea of a smart electrical grid - which more efficiently distributes power and which allows consumers to decide when the least costly time is for them to use electricity - is one that most people agree on as being a good one, the actual U.S. electrical grid has apparently been subjected to some hacking attempts and there are some fears that a more automated system will be even more hackable.

This is like icing on Big Blue's smart grid cake, of course, because now it can not only help automate and instrument the electric grid for various power companies, but can sell them secondary services to secure the more automated grids. To date, IBM says that it has been involved in more than 50 smart grid engagements with governments and power companies around the world, which is not a bad number so early in the upgrade cycle.

In a separate announcement, PC and server maker Dell also said this week that it would partner with those chasing ARRA funds to help them steer through the bureaucracy. Dell surveyed 662 IT managers at healthcare, government, and educational institutions who are impacted by ARRA, and 78 per cent of them said that information about ARRA was "non-existent, too generic, or not understandable," which comes as no surprise considering it was written by Congress.

It is too much, it would seem, for a clear means of applying for and receiving ARRA funds, and it looks like IBM, Dell, and others are positioning themselves to benefit three times from the law - first, in helping organizations figure out how to get funds; second, by closing deals for IT products; and third, in financing those product sales while organizations await ARRA funds. ®

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