Developing an ICT Economy: Capitalizing on the Geographic Location of the Azores
Information and Communication Technologies (ICT) are recognized as key strategic technologies by most national and regional governments throughout the world. Repeatedly, this sector is close to the top in terms of priority for investment and innovation. The question then is whether or not the Azores, by virtue of its geographical location, has any attributes that can be capitalized on so as to maximize its potential for success? Or to put it in a different way, are we able to identify such attributes? The question may relate to the development of the Regional economy through small ICT businesses or to the strategic installation of major nodes of a worldwide ICT infrastructure.
I am not in a position to provide a formal and complete analysis of this question. However, I will offer some reflections based on my experience over the years in the ICT field and personal connection to the Azores, including a recent trip to the Azores (stopover for 10 days) in the past summer. Even though the question refers to ICT, I find myself compelled to comment on some shortcomings involving air transportation and general accessibility to the Region.
Today's world is characterized by the potential for tremendous human communication and interaction over large distances facilitated by the very technologies under discussion – ICT, and specifically the Internet. It has been said many times that these technologies turn the world into a global village, in the sense that geographical distances cease to be a factor or impediment to communication and collaboration between peoples. There is the remaining issue of time zone differences – e.g. collaborators in North America with counterparts in India; however, in a sense we have learned to introduce work cycles to overcome these differences. But it is also the case that as much as communication has been facilitated, we still have the need to meet in person for direct interaction and this entails air transportation.
In spite of the tremendous advances in telecommunications where a single individual with little expense can mount, for example, live video coverage of a local festival and bring it to a community in far-away lands, we are traveling more than ever. It is therefore clear that if geographical location is to be a positive factor in the ICT economic development of a region then to some extent this factor should be related to two things: 1) attractive geographical features that make the location a pleasant and unique experience for visitors to visit or to live (including climate, cost of living, etc.,); and 2) the ease in transportation to and from such a region that facilities the development of strong external business links.
In the case of the Azores, the two main areas with large potential interaction are Europe and North America. A key issue that needs to be addressed is that of accessibility and barriers to travel. To facilitate interaction we need to think of a general notion of distance between places that incorporates not only physical distance, but also factors related to the ease of traveling such as regularity of flights, stable fares, and other factors that meet the expectations of business travellers in Europe and North America (seamlessness), and also the need for locals to interact with the outside, especially links to Lisbon, and the all important gateway to Europe.
In terms of physical distance to North America, the Azores is closer than for example Hawaii, but it is farther in terms of the more general notion of distance. Flights from North America to the Azores have been provided, over the years, by two or three charter airlines; and more recently it has been increasingly reduced to one – Sata. Travel over the years from the diaspora has been mostly for vacation, and the typical experience in these communities is that once the Christmas season ends it is time to start booking the flights and planning the summer vacation – lest one loses availability in terms of dates and reasonable fares. In terms of availability and cost, there is large variability from year to year. Also, from the standpoint of local Azoreans the link to Lisbon seems to be a bottleneck in terms of accessibility to Europe.
The question before us pre-supposes that interaction of Azoreans with external communities, be it in Europe or North America, is desirable beyond that of vacations. In order to facilitate transportation the "distance" needs to be shortened. Looking to the future, on the positive side, it seems that Sata is now in a position to collaborate with TAP and to capitalize on TAP's increased importance due to its Lisbon Star Alliance hub. Over the years I have travelled regularly to Lisbon but usually through London. This past summer I took my first flight to Lisbon through the Azores (Star Alliance). However the fact that one could travel Toronto-Lisbon (through the Azores) on Star Alliance does not seem to be widely known.
My Sata operated flight was pleasant and of course a great improvement over the old way of traveling to Lisbon through a European hub. Still I found some glitches which are not in the spirit of shortening the distance. Frequent flyer privileges that tend to be standard in the industry and familiar to business travellers did not seem to be widely implemented in the code-share flight. Also differences between whether a flight is Sata, or Sata International, and baggage limits of 20 Kg within the Azores for someone who is on a short leg of an international flight constitute glitches that contribute to the barriers and distance discussed above (seamlessness).
Another aspect of accessibility is that of adaptation after one arrives at the location; and of course in today's world, the most important is to get one's telecommunications up and running without incurring large roaming charges, and to have good access to car rentals, hotels, and restaurants. For the most part, all this infrastructure seems to be in place in the Azores and meets the required standards. Wireless coverage in the Azores for high speed Internet was quite good and there was no problem remaining connected. On the other hand other barriers emerged. The bank machines in Portugal do not accept credit cards to "load" the cell phone SIM card; one has to have a local bank account in order to benefit from the convenience of loading the cards at a bank machine. As a result in Sao Miguel it seems that there are very few convenient places in the whole island to load the card outside of the telephone store in a shopping mall in Ponta Delgada.
My experience in the Azores after many years away was generally positive. Pleasant walking and driving in Graciosa, and Sao Miguel with the fantastic and incredible views of the landscape next to the ocean unmatched by most of the places that I have been in the world are all attractive features for visitors and residents. The Azores also has a good road infrastructure, good signs (except perhaps getting out of Ponta Delgada), and great food. Graciosa has of course changed greatly over the years but a lingering impression which left a somewhat melancholic feeling was the low population for July except at the gatherings for the Touradas. Part of the reason may be due to unfavourable economic conditions in Portugal and the US, but could some of it also be due to the accessibility issues referred to above, accumulated over the years?
The future of a region lies with the young and in this sense education is the key. I did not have an opportunity to visit the schools but, returning to the ICT theme, education is an area where investment is never excessive. There are a few components that are key to the development of ICT activities in a region. 1) the development of local talent through education and especially good access to math and science education at all levels including lower schools, technical schools, and university; and 2) attracting foreign participants in various activities including short term conferences, sabbaticals, summer schools, international scientific installations, satellite earth stations, branches of foreign companies, technical support centers, data centers, and local ICT start-ups facilitated by external interactions.
It is important to facilitate access to all levels of education for Azorean students either locally or externally if a local program in an area does not exist. Not long ago there were few Portuguese in International conferences but over the years Portuguese participation in these conferences has increased greatly, including many graduate students from Portuguese universities -- in large part because of the involvement of Portuguese researchers in European programs. As a country Portugal is now, for its size, well represented at these conferences and other international scientific activities. It is not clear that Azorean students and researchers are participating to the same degree relative to the country, and ways should be found for Azoreans to gain greater access to these programs. In the end such access will lead to the development of expertise that is the mechanism to stimulate ICT activities and capitalize on the potential of the Region.
Looking to the future we consider international ICT installations. One possibility is the installation of data centers that capitalize on the location of the Azores. Data centers will become increasing important to support the future Internet. These centers will be increasingly large in terms of data storage capacity and will have some attributes as follows: use of large amounts of energy for operation and cooling, robustness to security threats including natural and man-made disasters, security, strategically located to facilitate connection to large capacity backbone networks serving the various data markets such as Europe and North America, possibly strategically located to account for network transmission delays (latency) required by the future financial industry, and possible strategic location for legal jurisdiction reasons.
Some of the above required attributes may favour the location of the Azores, whereas others may not. For example colder locations may be preferred to minimize cooling costs. Cost of available energy may be an issue on the negative side, or availability of an independent energy source (geothermal) may be a positive factor in terms of robustness and independence. The Azores' location, between Europe and North America, has the advantage for creating worldwide infrastructure nodes that are robust and independent. The possibilities in terms of attributes that can be decisive are numerous, and the Azores does have unique geographical characteristics. The location of the Azores was important in early days of cross Atlantic air travel as a fuelling stop-over. It was also important in the initial installation of undersea telecommunication cables. It is quite possible that in the case of data centers it may again become important for any of the above or other reasons.
To summarize we may look at ICT from two perspectives: 1) in general terms as a component of the economy of the region, and 2) as a strategic location for specific scientific or industrial installations that become key nodes in the world infrastructure. In terms of the first we have identified the improvement of air transportation as an important issue in order to shorten the "distance", and in terms of the second we have identified data centers as a possibility. These are merely some informal observations not meant to do complete justice to the question posed. The location of the Azores was important in terms of transportation as a cross-over point between Europe and the Americas. With the development of transportation technologies this importance was lost in the latter part of the 20th century. We are now at the beginning stages of a massive deployment of worldwide ICT infrastructure. ICT technologies form an important component of most developed and emerging economies and the potential for impact on the economy of the Azores in no exception. On the other hand the emerging interconnected world will have major infrastructure nodes whose locations will dependent on criteria that is quite different from the criteria for the development of the important transportation infrastructure nodes for the world of the 20th century. Currently we have a glimpse of some of the possibilities but many others will emerge as we progress further into the era of ICT.
Elvino S. Sousa Toronto, Canada January 10, 2012
Azores - International Business Center! "The Right Time Is Now!"
Whatever theories or opinions about the discovery of the Azores, about the dates and personalities who have found and populated the nine islands of lush green landscape, each one carrying its own and unique characteristics, all beautiful and distinctive in their typical differences, very rich in natural and human resources, to bring envy to any other site and people, no one can dispute that the archipelago, since known, has always been, is and will remain a strategic place, capable of greater and better use!
Used as a reference point for sailors for rest and supplies, which deserved, it is said, the visit of Christopher Columbus; used and exploited by settlers, and not only, who used its territory and its people on behalf of usurped rights, the Azores also record, in their history, facts and moments worthy of greater glory!
Once forgotten and abandoned, by interests and conveniences and by difficulties resulting from their geographical situation, the fact is that this same location has been also a determining factor in war and peace and has been a laboratory for scientific and empirical knowledge in areas such as meteorology, volcanology, seismology, hydrotherapy and sea and air activities. By the way, remember the importance that the Azores had in the "First Air Crossing of the North Atlantic" in 1919, conducted by Albert Cushing Read, from Tregassey Bay, Newfoundland, on May 16, having passed through Horta on the 17th, stopped in Ponta Delgada on the 20th and arrived in Lisbon on the 27th on that month and year! But see, most recently, what is happening in the fields of marine microbiology and support for space exploration!
On the other hand, what will be revealed about the contexts of politics, economy, immigration?!
If the importance of the Azores has been highly recognized by various quarters and various sectors, what challenges are put today to the land and its people, now more developed, more prosperous, on the path of other possibilities and new opportunities?!
The Azores, in the global context, particularly in the context of European-American relations, and vice versa, and even Africa, have today a heightened strategic importance, not only military, that due to new technologies, reduce distances and bring people and places.
It is therefore important and urgent that the Archipelago awakens to its vast potential! It's Time! We must learn to take advantage of it in all possible areas! In this sense, there are two areas of particular importance that seem to be essential: air transportation, as factor of mobility, fast and timely, and warehousing, or, rather, business center, as neuralgic point of meeting entrepreneurs and who they relate to!
At a distance of two hours from Lisbon, little more than that of Newfoundland, Canada and about four hours from Boston, the Azores can and should be the basis of modernity, progress, new development! Frequent transport, affordable, safe and comfortable would be the guarantee of convergence and high performing business, which would lead to financial gain, tourism and many other benefits! As for the existing road infrastructure, we can be proud of being the best in Europe!
To continue to invest in "nostalgia tourism" is inevitable and to continue to garner domestic and overseas sympathy is essential, but it's important to innovate and have the courage and adventure of seek and attract other audiences, which in itself would be "marketing" and bring economic, financial and cultural added value!
The Azores may be the Singapore of Europe and America!
The headquarters of small, medium and especially large companies can converge for the archipelago, with the corresponding "Staff", which would allow the establishment of highly qualified people and originate a remarkable cash flow, in addition to other benefits that would, natural and obviously, arise, such as hotels and restaurants, transport and other services!
From personal experience, for the sake of the Azores and the belief that the activity can be profitable, we who dare to create, in San Miguel, a branch of Globestar Systems / Connexall, a Canadian company that works in "e-learning" but that involves travel and meetings, we realize some difficulties, but also bear witness to successes that prove how much the Azores can win with the creation of favorable conditions to truly be a reference in the Business World.
"The Right Time Is Now!"
This is an excellent question and made so as to strengthen the positive - rather than being framed as a matter of not being able to overcome the difficulties of insularity.
Historically the practice of trade required the physical delivery of a product between a supplier and a buyer. Of course, the supplier could be a producer, manufacturer, dealer or any other person in the value network. With the Internet age now in full swing, the dynamic between traditional stores, e-commerce, and independent professionals continues to evolve and acquire new definitions. All these professional agents now have access to the Internet (with different levels of sophistication) and seek the best mechanisms to submit, advertise, promote and deliver their products.
As is generally known, the Azores are connected - between the islands and the rest of the world – by a network of undersea broadband fiber optic with access via DSL or FTTP. This alone allows us to answer this question with a much greater range of options. Regardless of the model of exploitation of this network and the pricing policy for each client, the network should be considered as a great solution to challenges posed by the location of the Azores.
Quite simply, everything that can be done exclusively via the Internet can be done on any island of the Azores with no competitive disadvantage. We all understand that the day to day business - phone calls, conferences (with or without video), exchanging documents - can be done easily on any island without geographic handicaps. Of course the situation is different when it comes to a deal with traditional products that need transports to connect the provider to the consumer.
The use of VoIP technology by each company facilitates all the services mentioned above, allowing connections between offices, factories and partners with a minimum monthly cost. Today, and using a simple broadband connection, you can talk, see, and exchange information freely between large distances: for example, the use of Skype. In addition, there are solutions of "unified communications" that allow transmission of voice / video and data with great efficiency and low cost within a network. And further, solutions like Webex, GotoMeeting and Cytrix allow even to design a whole enterprise of human resources in scattered areas without impacting productivity or control (management) of activities.
Of course that, even solving this basic problem of communication between companies, the Azores face other challenges. Challenges that are common across the world, such as the issue of time zones. Business today follows a cycle of 24/7/365, and companies have to get used to manage activities, partners and markets in different time zones. And not only manage but also benefit from differences.
In our opinion, the Azores have a privileged position because its time zone (GMT -1) is "the middle" of large economic blocs in the world: 1 or 2 hours behind Europe; 4-7 hours ahead of North America and, only 5-8 hours behind Asia. We intentionally use the word "only", and to give a perspective on this topic, we should remember that Silicon Valley is at a great disadvantage in this issue: 8 - 9 hours behind Europe, and 12 - 16 hours behind Asia.
Regarding the benefits of time zones, we have experience of managing companies (and teams) who are seriously geographically separated. The greater the separation, the greater the possibility of having the company (from a global point of view) operating more hours, thus with more and more market presence and greater possibility of "reaching" the client efficiently
Let's take for example the case of a company in the Azores with an office in Lisbon. Seeing the company from the outside, a customer can contact the company from 08:00 until 18:00 in the Azores:
The customer always calls the same number, and the technology directs the call to the group that provides the service without the client knowing its geographical location.
This is a 10 hours business day because the time difference is small. For a company whose product includes telephone support, the time difference becomes a competitive advantage. Imagine now a company with offices in Paris (2 hours), Boston (4 hours) and yet the case of Silicon Valley and India - a difference of 12 hours allows a constant activity for 24 hours.
Technology solutions associated with a flexible style of management produce competitive advantages in the market that allow its customers to identify a company.
Turning now to the question of how to capitalize on the geographical location of the Azores, until there is a solution of the capacity, frequency and price of aviation and maritime transport, the only sectors in which the Azores currently have no disadvantage are those where the "product" is not physical. For example:
Of course there is an element to consider in this discussion: how to establish relationships with customers that allow this level of cooperation and working style. Labor markets abroad use various mechanisms, but all are aimed at marketing, dissemination and acceptance of companies. In Silicon Valley, there is a very active weekly calendar of events, all with the aim of bringing companies closer together. The events are almost daily, usually after work and before dinner time. For example:
There are also groups whose business is to promote these meetings-and, in addition to the meeting, offer "life-long continuing education." This constant activity provides an environment of great discussion and exchange of ideas.
Alas, we are more familiar with what happens in the U.S.. But as you can see the activity is constant. In addition, companies have individuals always exploring markets and establishing / developing relationships with customers. These people, known as Business Development, are relevant and very useful for business activity and have a very distinct activity from sales. A vice president of Business Development acts as a mini-President, representing the company in the process of finding potential partners, to buy or merge companies, as well as contacts that can be profitable for the sales department. All this activity allows a relationship and later development of projects aligned with the company's strategic plan.
These are all ideas - and there are many more - that allow launching companies in the Azores without feeling any impact due to geographic location based on the use of information technology and communication.
We have also discussed above how to structure the company to even allow a geographic distribution (teams working on several islands) without the least impact on work efficiency - using a communication system based on VoIP, the company can easily maintain the same level of contact between people almost as if they were in the same place.
We hope that this discussion has fully answered the Prestige Network question. We are also available to further develop the topic by email or conference.
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