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Publisher’s
Profile: Technology in Fairfax
Virginia
Business
July
2003
Since
we are focusing on Fairfax County for this issue’s
regional report, we sat down with Bobbie Kilberg, president
of the Northern Virginia Technology Council to discuss
why her region is such a technology hub
Why
is Northern Virginia so attractive to technology companies?
“You have a number of factors that make this
area a successful high-tech region, like the technology
infrastructure that has grown up here since the late
sixties and a highly skilled workforce that is second
to none.
“The
Fairfax area has a technology asset base that goes along
with that infrastructure and a critical mass of companies
in diverse sectors of the technology industry. In the
Commonwealth of Virginia we have a very good solid policy
framework that is receptive to and friendly toward business.
When you add all those up together, (including the quality
of life, the excellent school system and the many cultural
opportunities) you really get a region that is hard
to beat.
“The
Virginia General Assembly has always been very pro-business,
pro-economic development and was willing to help the
technology industry as we reached a critical point in
1998, 1999, 2000 companied began to bubble up here with
all new creative ways of doing business. Suddenly people
wanted to use electronic signatures to sign on contracts
and that wasn’t something contemplated a few years
ago. The Virginia General Assembly was very forthcoming
as one of the first states in the nation to pass electronic
signature legislation, (they) updated the uniform commercial
code to include electronic transactions and the recent
anti-spam bill, are all examples of Virginia’s
foresight.”
How
about Maryland and Washington, D.C.?
"You cannot avoid comparisons (to Maryland and
the District) if you are in the region. And when doing
a comparison Virginia has always been a very business
friendly state and that goes back a long way, whether
it was a Republican or Democratic governor. It’s
a very different philosophy of government than the state
of Maryland has traditionally had, or the District of
Columbia. It’s been a state that values its business
community and especially values its small entrepreneurial
companies.
“There
is a feeling you get here in Virginia that we are open
for business. And I think that is very important. Another
area worth mentioning is, despite the downturn, you
have a venture capital base. It may not be doing a lot
of investments now – looking around the country,
nobody is. But we rank ninth in the nation (in venture
capital investment) and that is pretty good for an area
that has been traditionally viewed as a government town.
“Looking
at our workforce we are number two in the nation for
college degrees and PhDs per capita. And overall we
rank third in the nation in workforce education. That
is a tremendous incentive for a high-tech business looking
at doing business in the area.”
How
does Northern Virginia differ from other “high-tech”
areas?
“In a down economy a diverse business base is critical.
And if you compare us to Austin (Texas), Boston or Silicon
Valley we have a much more diverse base. We have always
had your IT federal contractors. In the old days they
were the defense contractors, or Beltway Bandits. Then
IT and systems integration came to the forefront and
these defense firms morphed themselves into IT federal
contractors. The U.S. federal government is the largest
purchaser in the world of information technology so
it natural that these companies would be attracted to
the area. Plus you had the Defense Advanced Research
Projects Agency creating the Internet here and all the
related Internet companies were also attracted to this
area. You can do Internet-related businesses anywhere,
but human nature is to go to where the people are who
developed it. And so you had a lot of Internet companies
come to here — to the source.
“The
ten largest defense companies in the U.S. also have
a major presence here in Northern Virginia. And nowadays,
defense can be a bit misleading since they are really
the ten largest defense/IT contractors to the federal
government.
“Then
you had telecom and in the seventies and you had the
Federal Communications Commission saying it was going
to deregulate the industry. Companies like MCI and Sprint
came into the market to eat AT&T’s lunch. But
they really didn’t trust the FCC so they decided
they better be close to Washington D.C. to make sure
that deregulation meant deregulation. So telecom companies
came to the source and this time it was the source of
the deregulation.
“You
have biotech. For that you have to look to Maryland,
which has the FDA, the NIH and Johns Hopkins. This vibrant
biotech industry starts up across the river and when
the nineties hit you have this realization that combining
computing power and life sciences gives you a whole
new industry – bioinformatics. Consequently you
see a lot more life sciences companies coming to Virginia
to take advantage of that computing power and everything
that goes along with it. We see the Howard Hughes Medical
Institute groundbreaking here. They chose Northern Virginia
to bring 330 of the best researchers in the world to
one campus. From that will grow a lot of spin-off companies.
And there are other examples like Eli Lilly opening
a plant in Prince William County and The Sabin Institute
coming to be near the Howard Hughes Institute.
“You
also have the international market due to the embassies
that are located in D.C. Over time the embassies took
a look around and decided this is a market for companies
in our home countries to come and do business and vice
versa — American companies going to their countries
to help their companies in high tech. So you had a burgeoning
international market established here that was unlike
anything else in the country.”
How
has the technology downturn affected the region?
“This has been a very serious downturn that will
take a long time to recover from but we are beginning
to see an up-tick. The ’03 federal budget finally
passed and you are seeing an increase in the money going
to this region for IT investments.
“However,
the B-to-B (business to business) and the B-to-C (business
to consumer) are still down. In my opinion it’s
going to take another year or two for these sectors
to come back. But at some point in time the customers
are going to need upgraded, more sophisticated technology.
And it’s not just that everyone is scared and watching
their bottom line. They are saying “Do I really
need that system now of can I put it off?” and
the answer had been yes. But the other part is the effect
that Y2K had. You had all these companies trying to
protect themselves against the Y2K they upgraded their
systems at the same time. So you had a massive upgrading
in many companies before they would have normally done
it. But they figured they had to do it for Y2K so I
might as well finish the job. Now they are saying to
the IT people “Well, why do we need new systems,
I just did it three years ago?”
“You
see a difference now that you didn’t see four or
five years ago. It used to be that if you wanted to
put a system in you went to the director level, then
it was the executive vice president level. Now, no matter
how small or large the company is, you have to go to
the CEO for approval. And in many cases the CEO doesn’t
understand the technology and if he/she couldn’t
see an immediate return on investment, they would say
“no, I’m not spending that.” At some
point that cycle will be broken but it hasn’t been
broken yet.
“As
for the federal Homeland Security initiatives, that
had been a positive for the technology industry and
the region. You will see increased spending in the ’03
budget and on through ’04 and ’05. The fact
that many of those (Homeland Security) companies are
here — is a benefit to the region. In many cases,
as much as 15 percent of total federal IT spending is
somehow related to Homeland Security.”
Return
to Virginia Business - July 2003
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