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Critical Site Selection Factor #5: Advanced ICT - Companies Look to Visionary Locales

“Unlikely” locales have become big players in providing this capability.

Q4 2014
This series examines the top-10 site selection factors as decided by the respondents to AD's Q1 Corporate Executive Survey. Labor costs, skills, and highway access are top of mind; construction and occupancy costs are key; and availability of ICT infrastructure is getting closer scrutiny. Find out what else your company should consider when making its next location/expansion decision…

The rise of “big data” in nearly every industry vertical has promoted continued importance of a robust information and communications technology (ICT) infrastructure as a site selection factor. In the most recent Area Development Corporate Survey, availability of advanced ICT services ranked as the #5 factor, with an importance score of 84.6 percent.

Corporate decision-makers now regard advanced ICT capabilities — telecommunications and wireless, Internet capability, fiberoptic networks, backup systems, and the software that integrates it all — as another aspect of infrastructure that now amounts to table stakes for potential locations, along with factors such as reliable electricity and sound transportation systems. Such capabilities are especially critical for certain kinds of operations such as data centers, shared-service facilities, and call centers. “It’s one of those boxes that you need to be able to check,” says Ginovus’ Larry Gigerich.

Need for Operational Talent
In significant ways, the need for ICT capabilities in a locale is strongly related to the availability of a local workforce that can support a company’s heavy reliance on high technology. The relationship reminds some corporate site selectors of how the industry was emphasizing a sort of precursor of IT talent, i.e., engineers, a decade ago.
Visionary thinking and leadership in ITC infrastructure also can vault some unlikely locales to the front of the pack in this factor.
“If you go back to projects from that era, one of the challenging tactical needs was to find engineering talent to work on a facility,” notes John Morris, leader of Industrial Services for the Americas at Cushman & Wakefield. “Now there’s the same sort of need for operational talent to work at a facility, but because the operations and automation in the building are so much more computer-driven, much of that need for engineering-operations talent has transited to the need for IT talent.”

That helps explain why some of the cities that perform best in this criterion are America’s well-established centers of high technology. These include Austin, Texas, and Provo, Utah, which are consistently ranked among the nation’s top centers of high-technology startup and early-growth-stage activity. They were the first cities — along with Kansas City — to get Google Fiber, the company’s nascent ultra-high-speed Internet service. And in 2014, Google announced that it is taking steps to expand the service to 34 other municipalities in nine metro areas: San Jose, California; Salt Lake City; Phoenix; San Antonio; Nashville; Charlotte; Raleigh-Durham, N.C.; Portland, Ore.; and Atlanta.

Atlanta is an example of cities that don’t come to mind as digital hotbeds but already fare well in advanced-ITC infrastructure. The city supports a booming health-IT and medical-devices industry with companies such as McKesson Technology Solutions, C.R. Bard, and CardioMEMS. All told, Georgia leads the nation with more than 200 health-IT companies and more than $4 billion in annual reported revenue.

Visionary thinking and leadership in ITC infrastructure also can vault some unlikely locales to the front of the pack in this factor. Chattanooga, Tennessee, is the best example of that. Thanks to the establishment of its ultra-high-speed Internet that began in 2008, the mid-size city has become home to a burgeoning local tech scene and the relocation of a number of businesses that have been drawn by the fast Internet and an accompanying “smart” grid. IT-services firm Claris Networks moved its 85-person operation from nearby Knoxville, Tennessee, to Chattanooga mainly because of the network. “It’s logical for every city to do it, but that doesn’t mean it’s going to happen,” Hunter Lindsay, Claris’ regional director, told CNNMoney.
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