Look Out ITs Growing

November 4, 2005
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GRAND RAPIDS — West Michigan barely noticed when homegrown e-commerce firm iMart was acquired by publicly traded Smart Online last month.

An Ernst & Young Entrepreneur of the Year finalist and member of the San Jose Software Business Cluster, the five-year-old IT firm is one of a growing number locally with fingers in the national market. But with only about three-dozen employees, iMart is not the type of company widely believed to drive the region’s growth over the next decade.

However, in an industry dominated by major market competition, iMart and its peers in the software development field have arguably gained more ground in the new economy than any other industry.

As a first-phase venture in an extremely competitive industry dominated by large market companies, iMart developed relationships with Fruit of the Loom, Fashion Bug, Chadwick’s of Boston, Bissell and Alticor. Its platform was used in InforMD’s Advoca interactive system, one of the first launches from the West Michigan Science and Technology Initiative.

On that note, the first commercial product from the Van Andel Research Institute was not a pharmaceutical, but a software application, XenoBase, released on the same day as iMart’s merger announcement.

In other recent news, Provia Software added Blockbuster Video to a list of clients that already included Gillette and Owens Corning.

Albeit from a small base, the combined computer and mathematical occupations will grow faster over the next decade than any other field in the Grand Rapids area, including health care, with a 32.4 percent projected increase between 2002 and 2012, according to the state’s labor office.

By projection, the two fastest-growing occupations and four of the top six will be information technology careers, led by network systems analysts (59 percent), systems software engineers (55.5 percent), software application engineers (49.6 percent), and computer systems analysts (44.4 percent).

Yet, the field is largely overlooked by the community, and underserved by economic development and educational efforts.

“The Grand Rapids region is looking for innovative ways to take part in the information age,” said iMart CEO Gary Mahieu. “At the grassroots level, entrepreneurs are ready to take part in doing that. But at the government, university and policy level, we’re not ready to do that.”

iMart was founded by a pair of industry veterans — Mahieu and Robert Chung — who first met as students at a private Christian high school.

For $5.1 million and stock, the company completed a yearlong effort to penetrate the packaged software market. Its e-commerce engine will be integrated into Smart Online’s suite of small business applications, and distributed under the BusinessWeek brand.

The large stock share assures that iMart will not be swallowed by the North Carolina parent, and instead be allowed to grow from Grand Rapids.

“We wanted a vehicle for national exposure and liquidity,” Mahieu said.

A year ago, Troy-based NuSoft Solutions acquired Sagestone Consulting, an Ernst & Young Entrepreneur of the Year and one of Grand Rapids’ most prolific young technology firms. The resulting company now has 170 employees across four states, with a significant share of ownership, leadership and growth in Grand Rapids.

“iMart, as with Sagestone, was acquired for all the right reasons,” said Sagestone founder and NuSoft President of Business Development Keith Brophy. “It’s very important what’s going on. Acquisition is scary in other industries; here, it’s a positive sign.”

Brophy has spent much of the past year assuring partners and peers that his company has no intention of leaving Grand Rapids. He’s worked hard to deepen his company’s West Michigan roots, tripling its charitable giving and signing a five-year lease extension.

“You can establish a local beachhead, but if you want to be a national player in the technology scene, you have to keep evolving,” he said.

As it turns out, for a manufacturing cluster, West Michigan has a disproportionate number of national caliber technology firms, Brophy said. Most of these are small companies, but so are the majority in California and elsewhere. And with its entrepreneurial attitude, West Michigan may be better suited for growth than even Silicon Valley.

Nationally, total employment among information technology professionals last year reached nearly 3.5 million, surpassing the previous high in 2000, at the crest of the dot-com boom. This came despite overwhelming outsourcing pressure from India, where one in 10 U.S. technology jobs went in 2004, along with a projected 3 million in the next decade, according to Gartner Research.

“The misconception is that programming has died, moved offshore,” said Paul Leidig, director of Grand Valley State University’s School of Computing and Information Systems. “But that’s just not true.”

What has changed, Leidig said, is that in the past computing was about programming — developing a system from scratch. A degree in computer science was a cookie-cutter match for a degree in information systems. Now, there is networking, wireless networking, Internet connectivity, Web development, Web interfaces and so on.

“The job market has broadened,” he said. “Therefore, education has had to change rapidly.”

Brophy noted that his teen-age daughter has comparable skills to that of a $60,000 computer programmer in 1995.

“There is a realization that I need to be able to prepare to go out and be adaptive, to come up with new technology and new solutions,” Leidig said. “This is more of a mind shift than a technology shift.”

Employers are looking for IT professionals who can use technology to create solutions, not apply solutions they’ve been taught, he said. As an example, none of the managers have a computer background at the region’s largest IT group, BDO Seidman’s Center for Information Management, including Executive Director Rich Rottman.

Dan Blackledge, founder and chairman of BlueGranite, another Ernst & Young Entrepreneur of the Year, stresses these principles in his advisory position to Western Michigan University’s computer science and engineering departments.

“A job as just a computer programmer will be hard to find,” he said. “The entry-level stuff, because it’s so easy and cheap, is being sent to Asia. We need people that understand not just how to write a line of code, but how to analyze the business problems and then determine how to use that code.”

“Computer work is broken up into those you throw a lot of bodies at and those that are staying here,” said Andy Catlin of Metrics Reporting Inc., whose consulting clients include the National Football League and Microsoft. “A successful Grand Rapids programmer has to bring other skills to the table: software architecture, business, management. It’s not enough to have a computer science degree.”

Carl Erickson, a former GVSU instructor and current president and CEO of Atomic Object LLC, disagrees with the rationale for sending work offshore. He teaches a course in Sweden called software craftsmanship, with the premise that traditional computer science courses “miss the boat.”

“They’re missing the elements of software development that can’t be taught in a classroom,” he said. “Those that come from developing real projects and living with the consequences of your work. … People who are good at it, they aren’t twice as good, they’re 10 times as good.”

Plus, because of the same principles identified by Blackledge, Catlin and Leidig, software development is much more collaborative, requiring users and programmers to work closely, rather than from separate sides of the globe.

Catlin added that for every degree cheaper and easier a project gets, firms will have to do that many more.

“People in West Michigan are hardworking; if they have to do twice as much, they’ll go out and do it,” he said.

In addition to education issues, Mahieu points to a lack of interest from policy makers. Economic development programs have bent over backward for manufacturers and the life sciences, but the only interest in technology firms has surrounded startups.

“We’d like more support from the local and state governments,” he said. “There really aren’t any tax incentives for technology.”    

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