Smart state’s e-cluster aims for the big time

Boasting the highest concentration of e-security companies and research facilities outside of North America, the Queensland government and industry are working together to create an e-security cluster that is set to take on the big players in the IT security market.

The birth of ‘esecurity australia’ two years ago as a cluster concept started as an informal networking arrangement between south-east Queensland’s e-security industry. The diverse membership ranges from law firms to research bodies, local companies creating innovative security products to global players such as VeriSign Inc. and Internet Security Systems Inc. (ISS). The challenge is formalizing this concentration of expertise into an effective business model with tangible benefits, which is why the next 12 months will be critical to Australia’s only, as yet, e-security cluster.

The goal is to leverage this home-grown mix of expertise by partnering with global players to pitch for big-ticket tenders both locally and overseas. Instead of fighting over a shrinking pie, a cluster can provide a single entry point for customers purchasing across the entire security spectrum.

Admittedly, creating such an entity involves a period of maturation as companies grapple with the concept of trust. The idea that companies which normally compete against each other in a specific industry can collaborate and share the spoils of contract wins has its obvious challenges, but the current business climate is spawning new ways of doing business in response to tougher conditions.

The real work only began a few months ago with the appointment of a chairman and executive after the Queensland government’s Information Industries Bureau made available a A$50,000 (US$33,000) business development grant to identify potential opportunities.

Chairman Bob DeHaan’s first job is to incorporate the cluster and provide a legal framework for members to operate, but getting the membership structure in place is a more complex task.

Smaller players don’t want to be sidelined in favor of the bigger companies that participate in the cluster recognizing they have plenty of resources of their own. One of the advantages of the cluster for smaller players is to have access to more resources and hopefully partner with the big names who can feed wins back into the cluster.

As B-Sec director Oliver Binz points out, “There are so many different interests — hidden or otherwise — in the cluster . . . we have to figure out how to work together to compete.”

But as a cluster, the idea is to look beyond self-interest and promote the health of an entire industry.

“While we would like to have the ability to compete against the IBMs of the world, liability is a very real issue as big customers like government purchase from trusted names; it is more likely we will partner together,” he said.

But this then raises the prickly issue of membership fees and sponsorship with cluster members keen to see the fee structure reflect the size of the cluster member and to ensure the likes of Microsoft doesn’t provide sponsorship dollars so huge the cluster is effectively hijacked.

Snapgear vice president Miles Gillham would like to see any further contributions matched dollar for dollar between government and industry. “If an outfit like Microsoft invested to promote its security message I would like to see a limit on its contribution as there is a risk on what return the company would expect. That’s why I prefer government support as it doesn’t have the same agenda,” he said.

DeHaan has earmarked A$100,000 as the money required for the cluster to continue its initiatives over the next year and is confident membership fees will account for 10 to 15 percent of that total.

He would also like to see preferred supplier status with the Queensland government so the cluster can get some runs on the board in its own back yard.

The cluster is also participating in an Austrade mission to Taiwan in October and recently participated in the AusCert conference.

Freehills solicitor Adrian McCullogh believes the success of the cluster will be determined in coming months, adding, “Like all young organizations it can explode or implode . . . we need to ensure we eventually become self supporting.”

Information Industries Bureau director Leigh Roach said the cluster is currently developing a business plan and the government is considering further funding for its development, but points out that it eventually has to be self sustaining.

Roach believes multinational involvement in the cluster is a positive step demonstrating its maturity and health, but that, at the same time, the cluster needs to maintain a strong presence of smaller companies.

“While there are legislative reasons why we can’t provide preferred supplier status to the cluster, we have introduced industry briefings that allow members to showcase their technology to Queensland government agencies. This is proving to be very successful as buyers then know what is available when they are ready to purchase and where to go,” she said.

The process of selling esecurity australia as a brand has begun with federal tenders and overseas sales in planning stages.

So why is Queensland home to Australia’s e-security industry? According to the first IT Minister to be appointed in Australia back in 2001, the Queensland Minister for Innovation and Information Economy Paul Lucas, the state has history on its side.

“Brisbane was the center in World War II for code breaking Japanese messages and 40 percent of all e-security activity here is linked to research and development,” Lucas said.

ISS has its Asia-Pacific region headquarters in Brisbane and RSA Security has a research facility.

There is also the Queensland University of Technology’s Information Security Research Centre (ISRC) which was founded by Professor Bill Caelli in 1988, a man the minister describes as a “guru, legend and icon” in a single breath.

He believes the presence of academia and research facilities has spawned the growth of home-grown talent.

“As a government you don’t just create a cluster by waving a wand, there has to be a level of competency in place and this state traditionally has IT strengths,” Lucas said.

The state is also home to Australia’s biggest software talents including Mincom and Technology One and smaller companies such as Stallion and Snapgear.

CEO of local success story Wedgetail, Gary Morgan, said it is like asking why wine grows so well in the Barossa Valley.

“So why does e-security grow so well in Queensland? We are clustered around good research; it is an environment you have to nurture until it becomes like moths attracted to the light,” he said admitting the next 12 months will be the real test for the cluster.

For the government, providing funding to the cluster provides an obvious ROI. It builds an industry that creates jobs and promotes the moniker of the ‘smart state’.

For private industry, however, it’s not as clear, but chairman DeHaan is willing to consider a broad range of sponsorship opportunities to ensure the cluster keeps moving.

It is testing times for the cluster but members are confident it is on course to lead some exciting e-security initiatives for years to come knowing there is plenty of talent in its membership base that has been nurtured on strong foundations.

As this young consortium of impressive expertise takes its first tentative steps into the main arena I’m betting Australia’s e-security cluster will be mixing it on the global stage in no time.