How ICT Affects Your Site Decision
Think speed, capacity - and taxes - when considering information and communications technology issues in the location process.
Gary Yates, Director of Site Selection, Jones Lang LaSalle (Apr/May 08)
Availability of advanced ICT Services ranked eleventh in the 2007 Corporate Survey conducted by Area Development. A high 82.2 percent of the survey respondents identified it as an important site selection factor. So what is ICT and why is it important in site selection?
ICT is simply stated as Information and Communication Technology, a blanket term that includes equipment or technology involved with the communication of information. The U.S. Census Bureau released a study March 6, 2008 that states U.S. businesses spent a total of $250.7 billion on ICT equipment in 2006 - and one can reasonably assume an even greater amount in 2007 and into 2008 given its vital importance to nearly all aspects of modern business and life.
The connectivity provided by ICT is the fabric of modern life. It is how information is shared and it is vital to how global business is conducted. It is not uncommon for a typical company to have R&D in the United States, manufacturing in China, sales and marketing across the United States and Europe, and a supply chain stretching around the globe. Real-time information sharing has become the standard and has opened up the competitive landscape. The World Bank views ICT advancements as crucial in developing countries. Communication and connectivity have made the global marketplace a reality for even the smallest businesses.
In selecting a geographic region or a specific site, ICT services become very important for three primary considerations. First is the availability and architecture of ICT infrastructure to the site. The second consideration relates to the taxation of ICT activities; and third is the presence of economic incentives to offset any challenges in infrastructure or taxes. Each plays an indispensable role in site selection and ultimately the success or failure of the location decision.
Architecture of ICT
Historically, a phone line was all the ICT connectivity most businesses needed to operate. As technology advanced and more information was being sent over the line, greater capacity and speed were required to keep pace with evolving business needs.
One of the first breakthrough methods developed for communicating digital information involved using laser or LEDs over fiberoptic cables. This is called synchronous optical networking or SONET. SONET was developed to transport large amounts of telephone and data traffic between equipment from different vendors. Like most new technologies, its design followed a natural evolution to overcome early-stage shortcomings. For example, the information density of SONET could potentially result in vast amounts of data being lost downstream from a single damaged line.
Thus, in order to avoid potentially catastrophic service interruptions, network engineers developed the SONET ring; this has been described as self-healing network technology, the availability of which now plays a significant role in the site selection decision. These multipath rings drive SONET to reach the "five nines" availability level.
However, in site selection, the mere presence of a ring does not automatically mean five nine availability. Ring security is optimized in a multidirectional architecture, but in some cases, a ring is merely two lines (a loop) in the same trench - redundant but not necessarily robust. Given the critical nature of data transmission to today's businesses, the ability to increase reliability via a truly redundant architecture, be it SONET or others like ATM or Gigabit Ethernet, is a key criteria for site selection.
While many sites have access to multiple SONET rings, multiple points of connection to the SONET ring are equally important. Often called the "last mile," the final lines from a provider's SONET ring to the individual site cannot be overlooked. The length of this line and its installation can be expensive and time-consuming. Ultimately, a good site could be worthless without feasible multipoint fiber connections. Site selectors often rank development sites according to their last mile communications architecture, and those who have such infrastructure in place or the ability to subsidize these improvements are at a distinct advantage.