Software Association of Oregon Hears from the Oregon Software Community

By Molly Moore, vice president, SAO

Part of the SAO’s charter is to act as a resource for relevant industry data, to provide opportunities for members to weigh in on important industry issues, and to let members help shape the organization’s future. Last month, with the launch of our newly designed newsletter, the Industry Update, we rolled out our first-ever Quick Survey. We wanted feedback from you to help shape the work of the Oregon Business Plan (OBP), and to find out what you think needs to be done to support the software industry. This month, we’re letting you know what we heard.

Some background on clusters and the OBP
The Software Association of Oregon (SAO) is the focal point of the software industry cluster in Oregon and SW Washington. Our cluster is a group of interrelated organizations bound by common commercial goals and centered on software. The cluster includes companies that build and sell software as a product or service, companies that embed software in hardware devices, and the IT organizations that use software to achieve their company’s goals. In addition, the service providers, universities and public agencies who serve these software-dependent companies are integral to the success of the cluster.

The Oregon Business Council (OBC), the group behind the OBP (www.oregonbusinessplan.org), has asked us to be a part of their Cluster Network Leadership Council. In that role, we will speak for our members and the software industry at large at the annual OBP Summit Conference on January 9th, 2006. Last month, we asked for your input to help us frame our response. Here’s what we heard:

Importance of the 4 Ps: People, Place, Productivity and Pioneering Innovation

The OBP has 16 factors that contribute to the success of a business climate. These factors are divided into four categories called the 4 Ps: People, Place, Productivity and Pioneering Innovation. We asked you to choose the characteristics that were most important to you within each of these four categories, and tell us how Oregon rates for each.

Higher education critical
The number one area of importance for you was within the People category: 60 % of you believe investing in higher education is important. Within those respondents, 71% felt that we are doing an average to poor job of investing in higher education.

Secondarily, in the Pioneering Innovation sector, 57% of you thought that entrepreneurial vitality was important, of which 68% thought we were doing an average or worse job.

Within the Productivity category, personal taxes came in third, with 46% saying this was important. Within those respondents, 97% thought we were doing an average job or below in this category.

In the Place category, only 12% of you thought that international trade and resource utilization were important, coming in at the lowest level of importance.

Expanding Oregon’s economic innovation a key initiative
The OBC’s main agenda is to consider and advocate for specific initiatives – policies and actions – that help achieve the conditions necessary for traded sector businesses to thrive. We asked you to prioritize your top concerns from among the current nine OBP initiatives:

• Improve public finance and services
• Expand Oregon’s capacity for economic innovation
• Achieve a higher return on Oregon’s investment in preK-20 education
• Enhance Oregon’s forest resource benefits
• Enhance Oregon’s transportation infrastructure
• Make land available for traded-sector industry development
• Simplify and streamline regulation and permitting
• Improve healthcare and control its costs
• Brand and market Oregon more aggressively

Out of these nine initiatives, overwhelmingly you chose “expanding Oregon’s capacity for economic innovation” as the leading initiative, with 90% of you stating this was important or very important (51% thought it was very important).

Secondarily, 78% of you felt that improving healthcare and controlling healthcare costs was important or very important.

74% of you thought that the initiative to increase return on investment in preK-20 education was important or very important.

Only 20% of you thought it was important or very important to make land available for traded-sector cluster development, making this the least important to you.

In addition to the existing nine initiatives, the OBP has 6 potential initiatives for 2006, as follows:           

• Combat drug use
• Reform water policy
• Reform energy policy
• Reform telecommunications policy
• Promote high performance manufacturing
• Promote targeted workforce development

We asked you to rate the importance of these as potential initiatives.

You felt promoting targeted workforce development was the most important (69%), with promoting high performance manufacturing second (55%). The least important to you was the initiative to reform energy policy, with only 26% of you feeling that this was important or very important.

What are the top advantages to doing business in Oregon?
In general, 66% of you rate Oregon as a good or excellent place to do business. The top three advantages of doing business in Oregon were:

1. Quality of life away from work
2. Talent of the local workforce
3. Networking opportunities available in the area and the supportive community

The quality of life comments centered on the ability to attract and retain employees due to our great infrastructure, our local and cultural events, and our natural surroundings.

With regards to the talent of the local workforce, you felt that we have a strong base of available, well educated workforce. One person wrote: “Portland’s technology professionals and West Coast location provide a strong basis for business growth.”

Networking and access to a supportive business community came in third as the greatest business advantage. Some of you wrote that we have a close-knit business community: “Portland is a small enough city to make relationships extremely important – networking is very important here,” was the feedback from one respondent. We also heard: “A small but effective and quality set of supporting companies (engineers, attorneys, short-run manufacturers) close by or easily accessible.”

Other comments related to our business advantages included no sales tax, good public transportation, and the fact that we have a solid base of technology companies. One respondent wrote: “The area’s concentration of technology-related businesses which provides excellent resources for collaboration and growth not only for businesses in that sector, but in unrelated areas as well.”

What are the top disadvantages to doing business in Oregon?
Taxes and education came across strongly as the two main drawbacks to Oregon’s business climate. The comments regarding taxes and education were very broad.

With regards to taxes, the feedback was that the tax structure is a detriment to operating and growing a business in Oregon, and that our taxes are too high compared to neighboring states. Specific comments related to taxes: Multnomah County taxes are particularly high; capital gains and personal income taxes are big issues; and we have an unstable tax base to fund needed resources.

This leads us to our second main disadvantage: education. You felt that the lack of funding for our school system makes it difficult not only to attract and recruit companies, but to attract and retain our workforce as well. We also heard that Oregon’s technical education is not able to keep up with the demands of Oregon’s technology-based companies, and we are not able to educate our existing workforce to keep up with advances in technology. Generally, you thought that our state’s education system is falling farther and farther behind education systems in other parts of the world, and we are losing our competitive edge because of it.

Other than taxes and education, you indicated that the lack of large corporate headquartered companies (Fortune 500), the lack of a streamlined government, and having few incentives to recruit companies compared to other states also contributes to our state’s business disadvantages.

What other initiatives would you like to see in 2006?
We left this as an open-ended question, so that we could garner creative ideas for new initiatives. Thus, we received a broad base of answers. However, there were a few common themes that emerged.

First and foremost were concepts to attract and retain companies. We heard from one person who asked that Oregon make a “concerted effort to attract businesses instead of just creating a brand. Follow the lead of those states that have been successful in attracting new business. Make it viable and lucrative for businesses to be here.” Another said: “Become a state that attracts certain specialties in certain industries – i.e., type, size, products, and services.”

Also, unsurprisingly, education continued to be an issue for concern. Suggestions around this included an increase in higher education for technical and engineering programs, the importance of K-12 education and investing more dollars. One person wrote: “The importance of K-12 goes without saying. There should be no doubt in anyone’s mind that an Oregon public education is as good as can be had in this country…people should move here just to put their children in our schools…we don’t need more prisons or more police…we don’t need more roads…we need the best schools. With education, the rest will come.”

Additional ideas suggested included incentives for businesses, including tax incentives and low-cost loans. Also, respondents would like to see more support for tech transfer ideas and bringing universities and start-ups together. One respondent wrote: We need “some way to look at the business ‘stack.’ We need to have tier-one Oregon companies make use of the tier-two Oregon companies and so on down the line. There should be incentives for companies to use other made-in-Oregon products both internally and as part of their commercial offerings. We should require government to use made-in-Oregon products instead of paying public employees to reinvent the wheel. We need a way for all Oregon companies to learn about capabilities of other Oregon companies before things reach the RFP/RFQ stage.”

Finally, some of you thought that we don’t need more initiatives. One person said: “I think we’ve got our hands full already. Let’s focus less on new initiatives and more on getting our current initiatives right.”

What do you see as strengths of the software industry in Oregon?
As another open-ended question, we again received diverse answers to this question. However, three key topics surfaced, including our innovative spirit, a highly skilled and highly educated workforce, and finally our investment and leadership in the open source movement. One person wrote: “Highly skilled, highly educated and intelligent people are here or are moving here, making the quality of those in the community better. Oregon is quickly becoming a tech hub, which results in more jobs and more opportunities for local people.” In addition, some of you felt that one of our strengths is the versatility in the different software offerings and software product technologies that we have.

What are your top labor/staffing issues?
Even though respondents thought our skilled workforce was one of our top strengths, your responses indicated that finding and hiring qualified candidates is your top labor issue. You said you had difficulty finding qualified, experienced executive-level talent, as well as strategic marketing and sales talent. Other feedback included your need for people with specific skills, such as qualified programmers, QA engineers and product managers. One person wrote: “I need more people who are widely versed in broad-spectrum technology and theory including everything from quantum mechanics to soldering. I need people who can actually think. And this means training more people in things like literature, philosophy, mechanics, biology, chemistry, etc.” You also pointed to higher education as a staffing issue, responding that we need a small pool of higher-educated individuals from credited schools, and we lack a world-class higher education technology program.

As you can see, there are many varied opinions from the business community and the software community specifically. We appreciate the input we received from many of you, but we still are seeking additional feedback. If you haven’t already done so, please make your voice heard, and respond to our survey by clicking here. By telling us your priorities, challenges and concerns, you are giving us the means to give our industry a voice in the Oregon Business Plan, and make our cluster initiatives more effective.

About the author
Molly Moore was the vice president of the Software Association of Oregon at the time of this article.