A few weeks ago I met up with Annie Hill of Priority One to discuss the technology sector in the Bay. It was an interesting chat. It was great to hear about the plans Priority One has and how they are progressing. Specifically the effect that the closer links between our our Polytechnic and the University of Waikato may have. At some time soon I will have to catch up with Karen Phillips at the poly and ask more about this.

The following is a transcript of the interview between me (AN) and Annie Hill (AH).

AN: Priority One has a section which supports the ICT sector in the Bay and encourages interaction with other sectors. Does Priority One have a long term plan for this sector and how important is it to the region's development?

AH: The ICT Cluster was established by Priority One in 2003 after it was identified as providing a high value opportunity to help grow the local, as well as New Zealand's, economy. It is a key enabler and driver of productivity in the economy as well as providing links in global value chains. It has been identified by central government as a key sector in New Zealand's wellbeing because of its ability to lift productivity and its status as a powerhouse of economic growth in its own right; creating high value revenue opportunities. It was also seen as a sector where companies could establish global competitive advantages, particularly in software development, while enjoying the lifestyle of working from the Bay.

AN: How much is this sectors overall value to the region?

AH: Due to commercial sensitivities and the strong growth of the sector in the last few years, we do not have information on the exact value to the region of the ICT industry. However, for New Zealand as a whole, the sector contributes around $6.2 billion, or 5.1 per cent to GDP. ICT businesses nationwide provide the equivalent of 36,300 full-time jobs and includes around 8,800 New Zealand companies. Just over 8 per cent of these have annual revenues of more than $1 million.

AN: Is it an area of growth and if so do you expect that to continue?

AH: Yes, it is definitely an area of growth, which is being facilitated by the ICT Cluster. When the cluster was established in 2003, there were around 60 members. Six years later, the cluster numbers nearly 350 people from just over 180 companies. The ICT Cluster is recognised throughout New Zealand as a hub from which information can be disseminated and we are frequently contacted by ICT professionals who would like to relocate to the Bay from other places and ICT companies that would like to establish here. Technology forms an integral part of New Zealand life, both in terms of business and leisure activities, and there is a strong level of research and development that occurs within the sector. We expect this growth to continue.

AN: I have touched on skill shortages in the past and we will come to that in a moment, but what other obstacles are there to increased growth for this sector?

AH: Getting opportunities to deliver projects into large companies/corporations is an obstacle for local ICT companies. This issue has two aspects: corporations usually want to deal with companies that are large and have a proven track record. The difficulty in accessing skilled ICT staff means smaller companies struggle to develop the capability to deliver on big projects. Smaller companies also lack the processes to secure tenders issued by larger companies.

Other issues include:
Tauranga is a very price sensitive market in the delivery of ICT solutions. Providers often find the price is driven down to a level that is not sustainable.
There is a lack of profile for the local sector in larger New Zealand cities.
The cost of renting office space is quite high in Tauranga.
Companies within the sector are very diverse.
There is a perception of Auckland companies that a better service is provided with a base there.
It is difficult for companies to link to research providers, however this is likely to change in the near future with the University of Waikato and Bay of Plenty Polytechnic setting up a new degree programme in computer science and some discussion that WaikatoLink, University of Waikato's commercialisation arm, might set up a presence here.

AN: With ICT being a fundamental and core tool of every business now, how does any shortage in this sector effect others?

AH: As outlined above, the issue for companies is their ability to obtain projects of a significant size so they are able to invest in the employment of staff and staff development in the long term. This is primarily through securing projects with large companies or government organisations. With the security of a large contract, it is not difficult to find the right ICT skills within the region, or utilise the ICT Cluster's networks to attract them to the region. The ICT Cluster is frequently contacted by companies to secure specific skills to undertake projects and has a high success rate in this area.

In saying that, obtaining access to skilled staff, particularly in the areas of software development/programming and technical people with business and communication skills can often be an issue. Some of the most sought after people are those with an ability to communicate and sell business solutions that are also technically savvy – a difficult combination to secure.

AN: Getting the right staff is an issue for any industry, but seems to be a major issue for some parts of the ICT sector. I am aware of some methods you have used to address this issue, could you tell us about a few?

AH: Skill shortages are not as severe in the sector as they were several years ago. There is also still strong interest from UK ICT professionals who would like to relocate to the Bay of Plenty, primarily as a result of marketing undertaken in Britain and Europe by Priority One between 2004 and 2007 when skill shortages were significant. There is also a strong employment aspect to the ICT Cluster's activities and it is recognised at a national level as a place to disseminate information if a company is looking for certain skills or an ICT professional is looking for work. There have been many successful matches made in this way.

Priority One also works closely with tertiary organisations to encourage the delivery of ICT programmes of study, and our INSTEP team works with secondary school students to inspire them with the types of careers that are available in ICT in the hope that they may consider this path when they leave school. INSTEP also links interested students with ICT businesses so they can find out more about IT careers in a hands-on environment.

AN: What do you see as the most important plan to create the right skill base for the future development of this industry?

AH: Priority One's focus is on attracting ICT companies to the Bay to form a critical mass that is nationally and internationally recognised as a cluster of expertise. This will further encourage IT professionals and companies to move here, increase the skill base and increase business capability.

We are also focusing on increasing educational opportunities in ICT, by strengthening links between secondary schools, the tertiary sector and ICT companies as well as encouraging programmes of research and development in this area. As a result of identifying a growing ICT sector in the Bay, the University of Waikato and Bay of Plenty Polytechnic have established a BSc programme in computer science that can be undertaken in Tauranga. There are also discussions around establishing an arm of WaikatoLink here – the University of Waikato's commercialisation arm.

AN: What is the potential for growth of this sector in terms of jobs and income to the region?

AH: If growth in recent years is anything to go by, there is significant further potential for growth of the sector, including jobs and income.

AN: Which one part of the sector do you see as being the fastest growing?

AH: Priority One's hope would be that the area of software development would be the fastest growing. This provides opportunities for high value products for export markets. If focused on our key sectors such as supply chain management, food processing and marine services, this would also give a strong productivity boost to local companies in other sectors.

AN: Can you tell us of any really exciting developments taking place right now in this sector; any companies which are breaking new ground and really making a stamp on the world?

AH: Pingar is probably the best example of a local company making a real stamp on the world. Working in partnership with Waikato University, Pingar has developed an innovative new internet search engine that provides better, more targeted results – all in a customised pdf document. It has set a new standard in web browsing and Microsoft has already integrated Pingar into its MS Office 2007 package. In addition, in 2008 the company was selected as one of only five companies worldwide to join Microsoft's Start-up Accelerator Programme.

The Pingar search engine understands the context of the question and goes inside documents and extracts content that relates to the question. It then pastes the information into a dynamic pdf report which is created in seconds, with a hyperlink beneath each extract linking it back to the original source document. Pingar takes the browsing out of browsing and allows users to immediately start reading the relevant extracted content. To prevent data being contaminated by all of the ‘noise' on the web, Pingar searches only reputable sources already in its library.

The WaikatoLink Hothouse group - a commercial wing of the University of Waikato that utilises the knowledge and skills of the university's brightest students has been pivotal in assisting in the development of some of the complex algorithms used in Pingar's technology platform. In addition, grant assistance has been provided by the Foundation for Research, Science & Technology to accelerate the development programme and NZ Trade & Enterprise are providing significant support both onshore and in the UK. Pingar has strived to focus its research and development in New Zealand, ensuring its core IP remains in its Tauranga base.

Pingar has set up a global sales and marketing company in London to improve access to major global businesses and was one of just four software companies in the world to be invited to present at the UK Technology, Innovation & Growth Forum in March 2008. The company has also recently set up an Asian base in Hong Kong, close to a range of potential customers in China and Asia.

I would just like to thank Annie and her team for the hard work they do for the ICT sector and the Bay in general.

Andrew