Innovation

January 8, 2007 / Number 9

A way of life

By Antonio Zárate

"There is strength in unity" is a popular saying that we often use but seldom put into practice.

When we see ourselves in business settings, we usually look at other businesses as competitors; we rarely see them as our allies in a "co-ompetence" regime, which is the addition of competence and cooperation.

"Co-ompetence" is closely related to the cluster concept, a production strategy that needs to be defined accurately, because there are some who think that it is a group of businesses working in the same field and operating in a specific geographical territory. This is undoubtedly a vision that is close to reality, although very limited.

Michael F. Porter, an expert in the development of strategies for strengthening business competitiveness, points out that a cluster is "a group of businesses and institutions associated within a particular field of operation, in geographical proximity, and united together because of their similarities and complementariness."

The key word in this definition is "associated," because the businesses that form the cluster work independently, but they also make alliances in order to participate in specific projects.

In Nuevo Leon, the State Government promotes the creation of clusters based on the triple helix: government, businesses, and universities. Other institutions and organisms that are fundamental in the promotion of economic growth also participate.

At the present time, there are clusters being developed in five productive sectors: software, aerospace industry, health, automotive industry, and home appliances.

The software industry in Nuevo Leon is working together with the government - both state and federal - and with universities to create a macro-cluster that will promote the participation of this sector in foreign markets, primarily the United States, which is the number-one software consumer in the world.

One example of this effort is the Monterrey IT Cluster project, which will begin operations in 2008, at the Research and Technology Innovation Park, with the participation of 40 companies that have organized themselves around a long-term vision.

It is also important to highlight the work done by the Citizens Consulting Council for the Development of the Software Industry, since it is establishing the foundations for the positioning of Nuevo Leon as a world-class supplier.

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Monterrey IT Cluster
40 Software Companies Bet on the Future

With the creation of the first software cluster in Nuevo Leon, small and medium entrepreneurs will form a common front to enter the US Market, which is the largest in the world.

The idea was conceived more than three years ago. As time went by, it changed into a concern and a topic of conversation in work meetings. After analyzing the advantages and disadvantages, the project took shape, matured and is now a reality. We are referring to the Monterrey IT Cluster, an initiative that brings together 40 software development companies and institutions.

This cluster is the first one of its kind in Nuevo Leon. A proposal was made by the Association of Information Technology Companies (AETI) to integrate it into the strategic actions of the Monterrey International City of Knowledge Program.

Manuel Coronado, President of AETI, points out that, in the beginning, the members of this association considered the possibility of setting-up their offices in one building only, in order to optimize their synergy and reduce their operating costs.

During this process, the creation of the Research and Technology Park (PIIT) was announced as one of the pillars for the Monterrey, International City of Knowledge Program.

"We decided to become part of this effort because it is a technology park that promotes innovation focusing on sustainable development, and is a strategy that has worked very well in other countries," Coronado expresses.

Software entrepreneurs were presented with the only condition that only companies devoted to research and software development could participate, which means that companies that market equipment and solutions are not part of this strategy.

Out of the 60 AETI members, 25 of them said "Yes". Furthermore, 15 companies from other associations joined in the project.

Coronado explains that the 40 companies are now AETI members, and they are all founding members of Monterrey IT Cluster, A.C.

"Being together allows us to create a common front, enabling us to accept large-scale, international projects. In addition, we are going to have world-class infrastructure in the areas of telecommunications, security, and functionality," he points out.

Through this cluster, which represents a 10-million dollar investment, entrepreneurs will project the integrated image that big US companies are looking for.

"Additionally, we are estimating at least a 15% savings in operational costs, which translates into greater competitiveness and productivity," Coronado points out.

Monterrey IT Cluster will occupy a 237,000 square feet area, housing a three-story building, 700 parking spaces, and gardens. Construction will begin in the second quarter of 2007.

The project includes common areas, such as reception, lobby, dining room for 200 people, 30 meeting rooms, video-conference room, and administrative offices.

Coronado explains that all companies in the cluster must have international certifications guaranteeing the quality of their processes.

"We already launched our first project for 12 companies to obtain CMMI (Capability Maturity Model ® Integration) certification, which is like ISO for the software industry, and 10 of them will receive it in 2007," he points out.

In addition, Monterrey IT Cluster companies have more than 300 engineers who are trained and certified in the tools that have the greatest demand in the world market in the areas of software development languages, data bases, and project management.

Coronado points out that the main challenge is not to demonstrate that there is talent and creativity in Mexico, but to gain the confidence of US business people, due to the fact that they still do not perceive our country as a software development power.

"We are all trying to triple or quadruple our size. If we can gain just a small portion of the Texas market, we can succeed," he adds.

 

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The Triple Helix is the Key to Enter the US Market

The US market places very clear demands on software suppliers: competitive price, certified quality, capacity to carry out large projects, and experience. Distance and time zone are secondary aspects; therefore, the best bidder gets the big contracts, regardless of its geographical location.

Blanca Treviño, President of the Citizens Consulting Council for the Development of the Software Industry in Nuevo Leon, points out that this trend has created the need to organize and integrate the mainly small and medium software businesses that operate within the state.

She adds that the creation of the first software cluster at the Research and Technology Innovation Park (PIIT) will provide better positioning and strength for participating companies.

However, this is only one of the strategies being implemented to make of Nuevo Leon a powerful software cluster that will address the needs of the US market.

Treviño points out that one of the advantages of the local industry is that it has more than 20 years of history, but only a few companies have managed to enter the US market, where the demand adds up to hundreds of millions of dollars.

India detected this potential some years ago and designed an offer capable of meeting that demand. It launched what is now known as offshore service, consisting of providing services to far away markets, primarily the United States.

"We cannot compete with India in labor cost per hour, but we have everything that is necessary to offer more productivity, which makes us competitive in the global cost of a project," says Treviño.

She adds that Nuevo Leon has the capacity to offer reliable service because companies are investing in the certification of their processes, which is very important if we want to attract US companies that are willing to pay for service quality, not for the geographical proximity of the supplier.

"Nowadays, it is very clear that if the government, universities, and the private sector work together as one entity, the probability for success is much higher. In a different setting, we would waste a lot of time competing amongst ourselves," states Treviño.

She points out that big companies must promote the development of small and medium companies (pymes) by integrating them into their projects, a process that requires the transfer of knowledge, since its objective is to introduce improvements in the work systems of small and medium companies.

"A significant advantage," she adds, "is that the government of Nuevo Leon is focusing on promoting the growth of knowledge-based industries, which is highly valued in international markets.

In addition, the Ministry of Finances is fostering growth in this area through the Federal Government Program for the Development of Software Industry (PROSOFT).

Treviño expresses that the Citizens Consulting Council, created in 2004, helps to focus the efforts of all sectors towards the same objective. This is made possible because of the participation of the state and federal governments, Monterrey International City of Knowledge (through the Innovation and Technology Transfer Institute), universities, multinational and local companies, as well as business associations.

This organism acted as a platform to create the Council for the Development of the Software Industry in Nuevo Leon, a Civil Association (non-profit organization) where all members contribute with financial resources. By doing this, they confirm their commitment and guarantee the continuity of the work, without being affected by the government's administrative periods.

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FUTURE EVENTS

JANUARY 8
Awards and Acknowledgement Ceremony for the Regional Program of Marketing of Technology
9:30 am - Benito Juarez Room of the State Government Palace
Monterrey , N.L.

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