Croatian ICT Cluster Initiative

Zagreb, September 22, 20093

Boris Krstanovi

Contents: 1. Introduction: ICT Industry

2. ICT Cluster Initiative3. cro.ict Association of Croatian ICT

Clusters4. Questions and Answers

Radionica: Uloga inovacija, s naglaskom na sektore tekstila/odjee i informatikih tehnologija

Boris Krstanovi

- CEO (1989. -)Multilink, ICT Solution Engineering and Consulting Inc.

- President (Cluster Manager) (2005. -)GRIT ICT Cluster, Rijeka

- President (2007. -)cro.ict Association of Croatian ICT Clusters, Rijeka

- Vice-PresidentAffiliation of Croatian Clusters within CCE

Information and Commnucations Techology

Information and Communications Technology (ICT) plays a key role in accelerating productivitiy and economic growth just as highways, railroadsand electrical energy once did!

4 Basic Ways in Which ICT Promotes Economic Growth

ICT promotes efficiency in every part of business, from development to marketing to accounting

ICT promotes innovation, shortening the time needed for new product development

ICT improves market conditions and access to information. ICT is a global technology ICT and the processes of globalization are directly

related

Information and communications technology has an important influenceon the development of business and fundamentally changes social life.

1. Introduction: Croatian ICT Industry in 2007/2008Secondary Sources on Croatian ICT Industry

Recent Studies:

SWOT Analysis: Weakness

Low Image/Recognition of Croatia as an ICT location Expensive Location (compared to the SEE region) Perceived lack of Government Priority in ICT Sector Low Government Spending on Education (4.3% of GDP) Low Export Orientation

SWOT Analysis: Strength Quality of Human Resources Quality of Technical Universities Quality of Infrastructure: Telecommunications Quality of Living ICT Environment

Source: High Technology Study on Croatia, The World Bank, MIGA, 2005.

1. Introduction: Croatian ICT Industry SWAT

7,9%

0,8% 1,2%

15,2%

26,5%

10,2%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

2002 2003 2004 2005 2006 2007

3.783,94.082,5 4.114,2 4.164,6

4.799,0

6.069,9

6.648,0

2001 2002 2003 2004 2005 2006 2007

1. Introduction: Croatian ICT Industry in 2007/2008Croatia - IT Spending (in HRK) 2001 2007 Source: IDC

Spending (M HRK) Growth in HRK

30%

14%29%

2%

11%

14%

IT ServicesSoftwarePCStoragePeripheral eq.Network eq.

I

Total = $1.24 Billion

1. Introduction: Croatian ICT Industry in 2007/2008Croatia - IT Market Segmentation in 2007 Source: IDC, 2008

24%

15%

13%13%

8%

5%

5%

4%

13%Communications

Combined Manufacturing

Combined Goverment

Banking

Home

Retail

Business Services

Utilities

Others

Total = $1.24 Billion

1. Introduction: Croatian ICT Industry in 2007/2008Croatia - IT Market in 2007 - Industries Source: IDC, 2008

Number of Employed in ICT industry in Croatia 1999 - 2004

Source : FINA, Prepared by IDC, 2006

1. Introduction: Croatian ICT Industry: Human Resources GAP

List of facts which indicate GAP of ICT specialists- Costs of IT Engineers - Waiting time for employment from 0 to up to 27 months (!?)- Mobility of workforce:

- from Regions to Zagreb- from Government to large companies and banks

- Underdeveloped knowledge-intensive sector of the industry- No FDI in ICT industry- No significant ITO/BPO business developed - High drop-out rate from universities- Unemployment of ICT specialists does exist

ICT Specialist GAP Depends on the:- Economy growth and development- Profile/occupation of ICT specialist: Regions: Zagreb v.s. rest of Croatia

-25,6%

-23,5%

-22,8%

-22,6%

-21,6%

-20,5%

-19,1%

-14,0%

-12,4%

-8,8%

-5,4%

-1,3%

-0,5%

1,3%

1,4%

1,9%

9,9%

11,3%

14,7%

16,7%

Public administration

Print/typographical worker

Tourism and hospitality

Agriculture, fishing and forestry

Education (other)

Civil engineering worker

Transport

Technician and similar

Communication services

Arts, design and architecture

Humanities

Food processing

Law

Higher education and science

Health care

Economics (other)

Natural sciences

Economics - finance

Engineer - (others: mechanical, electrical ...)

Engineering - IT

Cost of ICT Specialists Average Net IncomeSource: MojPosao.hr, 2006, N=7203

1. Introduction: Croatian ICT Industry: Human Resources GAP

Global Competitiveness Index 2008 - 2009: 61 (134)Networked Readiness Index 2008 - 2009: 49 (134)

1. Introduction: Increasing Competitiveness of the Croatian ICT industry

Usage Component 49/134 ICT use and government efficiency 85 Extentof business Internet use 66 Firm-level technology absorptio 100 Availability of government online services 82 Government sucess in ICT promotion 73

Rediness Component 47/134 Local Suplier Quantity 73 Local Suplier Quantity 90 Computer, comm., and other imports 2007 13 Buyer Sofistication 82 Importance of ICT to govt vision of the future 70 Government prioretization of ICT 72

Environment Componennt 54/134 Property Rights 84 Quality of Scientific research institutions 2006 58 Time required to start a business 100 State of cluster development 114

1. Introduction: Increasing Competitiveness of the Croatian ICT industry

Six recommendations to increase competitiveness of Croatian information and communications technology sector (National Competitiveness Council)

Using ICT to transform Croatia into a society based on knowledge and innovation

1. SCIENCE AND EDUCATION IN THE DEVELOPMENT OF A KNOWLEDGE SOCIETY

The number of qualified ICT workers, specialized for the use anddevelopment of new technologies should be tripled within the next three years

2. TECHNOLOGY ACCESSIBLE TO EVERYONEAccess to broadband Internet should be provided to everybody as soon as possible, as well as technological, social and regional inclusion

1. Introduction: Increasing Competitiveness of the Croatian ICT industry

3. E-ADMINISTRATION SHOULD BE DEVELOPED COMPLETELYIt is necessary to conduct a consistent and comprehensive reform of public administration as soon as possible, using the e-reengineering model, both on the national and on regional and local levels.

4. MORE DECISIVE USE OF E-BUSINESSVarious measures should be taken to encourage companies to conduct e-business in their work, and all existing barriers to e-business should be eliminated. Development of business capacity must be connected to the application of e-business.

5. PROMOTE FASTER DEVELOPMENT OF THE ICT INDUSTRYIt is necessary to design a development strategy for the domestic ICT industry with special emphasis on export capabilities. The institutional capacity of the ICT industry must be enhanced.

6. INCREASE THE EFFICIENCY OF ADMINISTRATION AND LEGISLATIONIt is essential to increase the efficiency of the administration by decisive introduction of new technologies, knowledge and skills.

1. Introduction: Increasing Competitiveness of the Croatian ICT industry

2. ICT Cluster Initiative

Findings: Croatian SW companies should focus on new market niches and

move from SW services (body-shopping) to SW products

Croatian SW companies should invest in development of high-quality SW products and solutions for the global market

Cluster formation is a key factor for Croatian SW companies in their SW export orientation

Source: Croatian SW Sector Analysis, 2006 (CARDS 2002 Project)

2. Cluster Initiative: Introduction: ICT/SW Industry Potentials in Croatia

Different starting points: Cluster programmers by industries

2. Cluster Initiative: Introduction

Different starting points: Objectives of Cluster development programs

2. Cluster Initiative: Introduction

2. Cluster Initiative: Introduction: Field Research

Source: Networking and Clustering in Transition Countries: The Case of IT Sector in Croatia,

University in Bologna, Italy, 11/2006, N=962/81

Business Environment: TRUST Key Success Factor

2. Cluster Initiative: Introduction

2. Cluster Initiative: Introduction: Field Research

Source: Networking and Clustering in Transition Countries: The Case of IT Sector in Croatia,

University in Bologna, Italy, 11/2006, N=962/81

2. Cluster Initiative: Introduction: Field Research

2. Cluster Initiative: Introduction: Field Research

The nucleus of the ICT Cluster - founded in December 2004 as an initiative of 4 successful Croatian ICT companies:

More than 50 years of joint experience in implementing and managing ICT projects

References in vertical markets: Finances, Telecom, Tourism and Auto More than 90 ICT experts with more than 66 industry certificates

(Microsoft, Cisco, Oracle, Linux, CA, ) Experience in international projects in German,

Swiss, Slovenian, Qatar markets

2. ICT Cluster Initiative: Incubation: BEAM (2004)

Target: Top management of the biggest Croatian hotel companiesGoal: To inform hoteliers about comprehensive BEAM solutions, consulting,