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Digital oil: What is it?

Here are two new words to add to your IT lexicon: Digital Oil.

Federal CIO Vivek Kundra is using the phrase “digital oil” to describe the current state of information technology.

“What do you mean by that?” Alan Marcus, a senior director with the World Economic Forum USA, asked Kundra during a morning session at the National Institute of Standards and Technology’s Cloud Computing Forum and Workshop III on April 7.

“What I mean by digital oil is the infrastructure is as important as oil is for our broader economy,” Kundra said. “I have spent a lot of time talking about how we’ve gone from 400 data centers [in 1998] to 2,094 – the number keeps fluctuating,” across the federal government, he said.

The average utilization of servers in that infrastructure is less than 26 percent, compared to 79 percent in the manufacturing sector. And that’s a big problem since forecasts predict over the next five years, “we’re going to create more digital content than we have created content since the beginning of civilization," Kundra said.

The National Archive of Records and Administration digitizes a billion pieces of paper a year, he said. "Think about all of the content being created through blogs and video as well as aggregated content generated through the smart grid and health IT."

The demand this places on computer power, sensors and storage is going to fundamentally change what Kundra calls "digital oil."

"Our current compute models are so inefficient, expensive and non-environmentally healthy in terms of energy utilization that we are going to have to fundamentally reengineer our operations to a more renewable infrastructure," he said. We’ll have to think about the impact this demand will have on the minerals used to power the society of the future, he said. 

Posted by Rutrell Yasin on Apr 13, 2011 at 7:21 PM


Reader Comments

Thu, Apr 14, 2011 Mary Adams Massachusetts

I agree that the better use of IT infrastructure represents "digital oil." But the ultimate "oil" is the application of IT to change every industry. This will ensure that "knowledge is the new oil." The shift from the agricultural to the industrial era was about the use of technology to leverage human physical effort. The shift from the industrial to the knowledge era we describe in "Intangible Capital" is about the use of information technology to leverage human mental effort. That's where it gets really exciting and is/will literally change everything.

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