Information Technology and Innovation

1. Information Technology and Innovation Stephen D. Galvan U.S. Small Business Administration Acting Chief of Staff, Chief Operating Officer and Chief Information Officer Management of Change Conference May 24, 2004

2. Presentation Objectives • Reaffirm the Administration’s commitment to the importance of innovation and the application of advanced technologies in American business • Highlight the role of small business in fostering innovation and contributing to the growth of the economy • Share insights on how the use of information technologies, specifically E-Gov efforts, are helping Government in support of its customers • Cite examples of Government implementation of E-Gov

3. Importance of SB to Economy • Represents 99.7 percent of all employers, 50 percent of employees, 44.3 percent of payroll, 50 percent of non-farm private GDP • Generates 60 to 80 percent of net new jobs annually. • Produces 13 to 14 times more patents per employee than large patenting firms. • Employs 39 percent of high tech workers (such as scientists, engineers, and computer workers ) • 97 percent of identified exporters and produced 29 percent of the known export value in FY 2001.

4. President’s Small Business Agenda • Provides new tax incentives to make important job-creating investments • Gives SB owners more power to provide health care to their employees • Tears down the regulatory barriers to job creation • Saves taxpayer dollars by ensuring full and open competition to government contracts • Uses innovation and technology to provide small businesses with the information they need to succeed

5. SB and the Innovation Process • SB play a role in large firms’ technical breakthroughs through acquisitions, patents, and employees • SB are major contributors to inventions in newer hi-tech industries (telecom, biotech, nanotechnologies) • Represent 40 percent of highly innovative firms (2002) • Smaller innovators concentrate on newer, science-based technologies (non-capital intensive) • SB represent 1/3 of most prolific patenting firms • SB are 13 times more innovative per employee than large firms • SB more effective in producing hi-value innovations which are often more technologically important

6. Background and Context • Managing change is a critically vital issue in both government and industry—we must change the way we do business to remain competitive and succeed • Principal Drivers of this change: • Globalization • Velocity of Technology refresh • Insufficient resources • Citizen Demands from their Government • IT is an enabler of this change – it is about transformation and value, the CONTEXT for technology investment • SBA’s mission is helping small firms succeed (promoting small firms technology formation and growth) • IT materially enhances SBA’s chances of delivery and SB’s success

7. IT and Innovation: User Value Chain—Solve Problems

8. IT and Innovation: Principles • Federal agencies required by PMA to change—no longer business as usual • Indicators of success: increased value, reduced costs • Committed to using technology to offer solutions, not just information • Move from information - to knowledge - to solutions • Principles of unify and simplify drive us to offer a directory “channel” of information and service; platform that is EA-compliant; and online transaction capability using XML • Example of IT and burden reduction: business.gov (information, tools and referrals, transactions) • Increased value (save time, offer convenience, accessibility, quality) decreased cost (save money)

9. IT and Innovation: E-Gov Value • By offering information in a one-stop format from multiple sources accessible across platforms and jurisdictions: Businesslaw.gov, Business Gateway, Regulations.gov • By streamlining our back room processes that manage core processes: e-travel, e-payroll, e-records mgmt, e-training, e-clearance, E-TRAN • By creating marketplaces for buyers and suppliers of goods and services: IAE, Hubzones, Matchmaking, Asset Sales, GovBenefits, Recreation.gov, E-Grants • By offering online education and counseling: SCORE.org, GoLearn • By making specific functions online transactions: e-file, Export licensing, 8(a) eligibility and certification, paperless disaster loan approvals

10. Improving the SB environment: Driving Results • SBA approved $16.93 billion in loans and venture capital in FY03 • Approximately 2.1 million entrepreneurs received business counseling and technical assistance • In FY 03 small firms exceeded the 23% goal for the total value of federal prime contracts • The Office of Advocacy drove regulatory savings of over $31 billion from 2001-2003 • Business Matchmaking taking Government Contracting opportunities nationwide, matched 14,000 small businesses with government and private industry buyers

11. IT Value-added: E-Gov Thoughts - 1 • Offers opportunities for organization transformation and improved service production and delivery • Changes way we do business, requiring a change of culture • Successful E-Gov is vision-driven, not technology-driven • Need to develop win-win approach that creates true benefits for all stakeholders: e.g., citizens, enterprises, stakeholders, and public sector employees • Need to explicitly address employee concerns • Need cooperative partnerships: vendors, solution providers, and users must work together. • Build trust by engaging citizens in public governance and promoting transparency and accountability

12. IT Value-added: E-Gov Thoughts- 2 • Need clear priorities within a strategic framework to provide strong cost-benefit ratios • Need to consider non-technological factors in design • Need adequate legal and regulatory framework (e.g., digital signature, privacy) • Standardization should ensure interoperable platforms, data formats, business rules, and administrative processes • Need new architecture of public service delivery: front end (portal, call centers, neighborhood shops) needs to be close to citizens, but back office can be anywhere • Promote seamless government through reorganizations and partnership networks (silo smashing)

13. Conclusions / Going Forward • Information Technology enables Government and Industry to enter productive public-private partnerships to create a marketplace that fosters the formation and growth of innovative hi-tech small firms • Information Technology provides the capability to create, cost effectively, an economic environment that promotes American competitiveness, job creation, and better opportunities for all citizens • Small business innovation is a major contributor to economic growth and global competitiveness Going Forward – [short term] • Focus on linking SBIR Phase I and II awards to the National Blueprint and emphasize Phase III commercialization • Leverage within SBA and externally (Fed/state/local govts) financial and technical resources to help small businesses develop, apply, and commercialize patents

14. Thank You