Information Technology Growth Local Regional and the State

Information Technology Growth: Local, Regional and the State Darryl d’Aquin Comm. Tech Industries

Agenda § What are we going to talk about today? State of the State □ Economic Development Initiative □ New Orleans Region Information Technology Industry □ Next Steps □ 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

State of the State § Measurably Poor Economic Conditions Region -wide □ The New Orleans Region has added 56, 700 jobs since 1990 • Birmingham, Memphis and Nashville have added over 100, 000 in the same time frame • New Orleans is ranked 13 th of 14 southern metro areas for employment growth □ The New Orleans Region was the only metro area to experience a net decrease in population from 2000 to 2003 • New Orleans metro area is ranked 14 th out of 14 southern metro areas for population growth 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

State of the State § Young People Leaving for Opportunities Elsewhere □ Personal income averages $19, 174 per capita for the New Orleans metro area • New Orleans metro area is ranked 14 th of 14 southern metro areas in per capita income □ Retention of less than 23% of college graduates from our local universities 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

State of the State § Business and Industries Downsizing, Closing or Leaving □ Increase in the business base has been less than 1% in the New Orleans region over the last 5 years • New Orleans metro area is ranked 10 th of 14 southern metro areas in new business growth □ The New Orleans region’s retail sales have ranked lower than all larger, equally sized and smaller metro areas over the last 5 years • New Orleans metro area is ranked 14 th of 14 southern metro areas in retail sales growth 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

So…What Next? Why stay? What do we do next? Can we turn the tide? How? 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Why Stay? 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

What Do We Do Next? § Economic Development Initiative Creates Jobs □ Integrates the region and the state □ Engages our Colleges and Universities □ So what is that initiative? 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

CLUSTER 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Cluster Initiative § Dr. Michael Porter – Harvard Business School Critical mass – in one place – of unusual competitive success in particular fields. Geographic concentrations of interconnected companies and institutions in a particular field. 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Why Clusters? § Location still matters – but for different reasons: “Clusters represent a new way of thinking about location, challenging much of the conventional wisdom about how companies should be configured, how institutions such as universities can contribute to competitive success, and how governments can promote economic development and prosperity. ” Michael Porter 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Why Clusters? § Increase productivity of companies based in the area § Drive the direction and pace of innovation, which underpins future productivity growth § Stimulates the formation of new businesses, which expands and strengthens the cluster itself A cluster allows each member to benefit as if it had greater scale or as if had joined with others without sacrificing its flexibility. 70% of cluster members are holding or growing their competitive position. Harvard Business School study 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Why do clusters form: 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Who makes up a cluster? § A group of independent and informally linked companies and institutions representing a robust organizational form that offers advantages in efficiency, effectiveness, and flexibility § Basically, all the various “inputs” and “outputs” associated with a particular field or industry 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

How do clusters stimulate economic development? § Increase the productivity of companies based in the area Better access to employees and suppliers □ Access to specialized information □ A host of linkages among cluster members results in a whole greater than the sum of its parts □ § Drive the direction and pace of innovation, which underpins future productivity growth 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

How do clusters stimulate economic development? § Stimulates the formation of new businesses New suppliers (“inputs”) due to a concentration of customers □ Gaps or niches □ Lower barriers to entry □ Easier financing □ The net result is that companies in the cluster advance relative to rivals at other locations. 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Components of a successful cluster: § Governments □ □ □ Create an environment that supports rising productivity Ensure high quality inputs such as educated citizens and physical infrastructure Work with the private sector to reinforce and build existing or emerging clusters Supportive public policy and legislative issues Growth incentives – target investments to clusters Strengthen networking and company linkages – build trust § Embrace the pursuit of natural competitive advantages and specialization rather than trying to imitate successful clusters in other locations 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Components of a successful cluster: § Build trust and linkages among firms; including critical value chain components § Build critical mass § Foster entrepreneurship § Geographic proximity leads to: Closer relationships □ Better information □ Powerful incentives □ § Clusters must be INDUSTRY LED with the support of government and educational institutions 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Components of a successful cluster: “This task will require fresh thinking on the part of leaders and the willingness to abandon the traditional categories that drive our thinking about who does what in the economy. The lines between public and private investment blur. Companies, no less than governments and universities, have a stake in education. Universities have a stake in the competitiveness of local businesses. By revealing the process by which wealth is actually created in an economy, clusters open new publicprivate avenues for constructive action. ” Michael Porter 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Things that can harm a cluster: § Over consolidation, mutual understandings, cartels § Regulatory inflexibility, restrictive union rules § The quality of schools and universities § Government intervenes in competition § FEAR – When companies in a cluster fear that a growing cluster will attract competition, drive up costs or cause them to lose employees – Short sighted 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Cumulative effects of successful clustering: Recruitment of a New Firm or Industry into the Market or the expansion of an existing firm. Creates more jobs, especially in construction and infrastructure. Increases purchasing power. Affects the local pool of labor. Brings new talent, increases training opportunities, and the wage rate Leads to increased demand for support services such as schools, hospitals, retail stores More jobs, higher wages, increase in services results in an increase in the number of residents mainly through in-migration Attracts both customers, supplier firms and supporting firms to the locations. Backward Linkages: Purchases by the new firm from those firms supplying raw materials and components Forward Linkages: Sales by the new firm to other firms who further process the product or are the final users An increase in population translates into higher incomes which means greater consumer spending and also higher revenue for the local area Invention and Innovation Area becomes a growth pole Results in new construction activity and the growth and development of a tertiary sector. 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Clusters around the world: 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Clusters in the US § 40 States have embraced the cluster concept § Louisiana’s Clusters: □ □ □ □ □ Advanced Materials Agriculture/Forestry/Food Durable Goods/Manufacturing Energy/Oil & Gas Entertainment Information Technology Life Sciences/Biotechnology/Biomedical Logistics/Transportation Petrochemical Technology 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Clusters in the New Orleans Region: § § § § § Arts & Entertainment Environmental Technology Food and Consumer Products Information Technology Life Sciences Maritime Medical Oil & Gas Petrochemicals Sports 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

New Orleans Region Information Technology Cluster § IT Cluster Focus Areas □ □ □ □ Opportunities for job growth Legislative initiatives Workforce development Marketing and communications Engage with the State Engage with LA Federal Delegation Engage across other clusters 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

N. O. Region IT Cluster § Key Challenges: Building linkages with the State □ Company competitiveness □ Thinking “outside-the-box” □ Building linkages outside the region □ 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

N. O. Region IT Cluster § Results – almost 2 years later □ Government • Strong ties with State • Stronger ties with LA Fed. Delegation • Investments in major IT initiatives • IT friendly legislation • State aggressive at building regional and state-wide linkages ØUNO Research & Technology Park ØLafayette IT Initiative ØLouisiana Biotechnology Incubator ØUniversity IT Support ØUniversity Biotechnology Support ØUNO/Avondale Maritime Technology Center of Excellence ØLouisiana Technology Park ØShreveport Biomedical Research Foundation ØPennington Biomedical Research Center Ø Total: $100 Million $48 Million $16 Million $85 Million $40 Million $37 Million $11 Million $15 Million $437 Million 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

NO Region IT Cluster § Results – almost 2 years later □ IT Industry • • □ Building trust and collaborating locally, regionally and state-wide Creating jobs (1000+ and more coming) Engaging with other clusters in the region Development of an IT Resume Universities • Beginning to engage more aggressively with private sector • Focus on R&D and technology transfer 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

N. O. Region IT Cluster § Key Accomplishments: □ □ □ □ □ Eliminate software tax Quality Jobs incentive program Investment into UNO R&T Park Investment into expansion of the NFC State-wide effort with DHS UNO-Resurgence software development Support of Entrepreneurship – Idea Village Proof-of-Concept Fund Regional IT marketing brochure 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

IT Cluster Next Steps § Continue building trust and relationships § Encourage thinking outside-the-box § Create 10, 000 new IT jobs in 5 years 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Wrapping IT Up § § § Realization of the problem Embrace the Cluster concept Organize the IT Cluster initiative Start building the relationships and linkages Focus on initial WINS Keep pushing 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com

Thanks! Darryl d’Aquin Comm. Tech Industries ddd@commtech. com 1615 Poydras St. New Orleans, Louisiana 70112 504. 200. 1300 fax 504. 200. 1310 http: //www. commtech. com