Sun, Sea and Software

Curaçao has a rich history in the service sector. However, it may be surprising that IT services only make up a very minor portion of GDP1 – despite a rapidly growing global market and Curaçao’s potential to be the Caribbean leader in this area.

TEXT KATY BRANUM

Solid Growth
According to the International Data Corporation (IDC), the worldwide software market grew by 3.6% in 2012 reaching a total market size of $342 billion, comprising of both technologies and solutions.2 This high growth presents a firm opportunity for new entrants to this market to capture the increasing demand and high likelihood of business success that an expanding market delivers.

Leveraging a Core Competence
Fortunately, the service industry in Curaçao has classically dominated GDP figures, representing 75% of GDP in 2011.3 Typically this is driven by service industries such as: tourism, financial services and the oil & gas industry. More recently, however, there has been a fresh type of service industry that has begun to gain traction on the island — the IT software industry. Although the software industry with brand titans such as Google, Facebook and LinkedIn make this market highly attractive, it is also very, very competitive due to the low barriers to enter it. For software companies to thrive they must keep improving, innovating, networking and expanding. These demands are overwhelming and perhaps don’t naturally resonate with the laid back approach of the Caribbean. However, due to Curaçao’s unique strengths and service sector foundation, it has nurtured successful software companies that are active in the region as well as further abroad.

Rising to success, on the strength of the past.
Curaçao ’s unique history and location means that whilst it holds strong ties to Europe, it is also a gateway to the Caribbean, as well as Latin and North America. This dynamic has bred a complex and highly successful financial services industry that is characterised by a multi-language, multi- currency and multi-island environment.
Evolving from this dynamic came IBIS Management Associates, a software company that specializes in servicing the financial services market. IBIS Management Associates develop and sell software that calculates a financial institution’s transactional costs. Initially servicing the local financial services industry, today the customer base extends throughout the Caribbean, Central America and South America.
Clark Russel, CEO IBIS Management Systems explains what he believes to be the key to his company’s success: “I ask myself why are we so different? Then I realised that we have a very complicated financial sector here on Curaçao, so when we developed and designed our software product to service this industry, it had to handle a high degree of complexity within the banking system. Now when we go out to visit other markets, we find our product is easy to sell and implement because most other financial sectors are much simpler — a single currency, single regulatory requirements, etc. The unique environment on Curaçao has led to the development of this software system, and ultimately to our success.”
Other factors that have greatly helped IBIS Management Associates effectively compete in the very challenging and highly regulated finance market is the clear understanding of how they help their clients. When discussing their software products with customers, they discuss the challenges within the business and how their software solves them. According to Clark, his style of communication provides IBIS Management with a unique approach to customer discussions and differentiates them from other software vendors. “When we approach clients we don’t talk about technology, we talk about how we can help them progress their business, such as, improving their profitability, lowering costs, or reducing business risk.”
For IBIS Management Associates, being unique is the secret to their success. Perhaps in the end they might be selling software that is similar to others, however, the market clearly sees them different than their competitors.

Tailoring software solutions to local business needs
Many international entrepreneurs look to Curaçao as the perfect hub to service local demand and as an ideal launch point to access other markets in the region. It was these factors that led to the foundation of Ictual – a local company offering software solutions to the business community within the region.
Established 20 years ago, Ictual offers software solutions from other vendors, as well as locally developing custom made software, to address its customer’s unique needs. This successful business model has resulted in strong brand recognition across the Caribbean. The company’s headquarters are based in Curaçao, with business units in the Netherlands, as well as Brazil and formally the USA. Initially launching as an Oracle business, Ictual learned that the Caribbean business software requirements differed slightly from larger businesses found in Europe and the US. Consequently, they evolved their product suite to meet these needs.
Andrew Solomon, Managing Director from Ictual, explains, “Our approach to solving a customer’s need is not looking at a software solution that is “one size matches all.” We look at the best of breed software that is the perfect fit for the specific needs of the client. Sometimes this can lead to recommending a lesser known brand name, but it is exactly what the client is looking for.”
Ictual also recognised the value in partnering with local businesses as a strategy to penetrate the market in other islands. This approach has delivered success in Aruba St Martin and Surinam.
According to Solomon, “What makes us different is that we understand the local way of doing business. When we go to another island in the Caribbean, we are always seeking to find a local partner that knows the local scene even better than we do. They will be the first to hear about needs being discussed and, hence, be the first to spot new opportunities.”
To further drive costs down and remain competitive, Ictual has now set up client online support services; many software implementations are also completed online. These changes dramatically reduce the costs for bringing a new client on board, as well as significantly reducing the costs for the ongoing servicing of customers. From a sales perspective, Ictual utilizes technology such as Skype and online presentations as part of their sales engagement processes, thus reducing the number of face-to-face meetings. Effectively leveraged technology across operations and management of the business has kept overheads low whilst still delivering a high level of service.

Challenges that local business face
Curaçao´s lifestyle and location is a powerful drawcard to attract new IT services and top talent to the island. However, there are also large obstacles that currently jeopardize new investment and local IT service success.

Harnessing technology to improve service and efficiency
A common subject is that service is not at the level that it needs to be as many standard processes are currently taking unacceptably long periods of time to fulfil. This is the case in both private companies as well as government bodies, hampering the citizens as well potential investors from abroad. It has been suggested that making greater use of technology would facilitate more efficient work practices which would increase productivity, thereby resulting in improved service. This enables the best of both worlds in one location — the Caribbean lifestyle and a thriving business environment.

Attracting top talent
For businesses, such as software companies, it is very important to be able to attract top talent to help ensure that they continue to develop new products and thus remain competitive. Great difficulty is currently experienced when trying to secure residence permits and work permits swiftly, placing local businesses at a disadvantage to other companies that they are competing with on the international stage. Solomon comments, “if you want to be competitive in the international scene, you need to make sure that paperwork such as the permits and red tape are not pushing international investment away from Curaçao or handicapping local businesses that need to attract the best talent globally.”

Knowledge bank
Education in Curaçao is viewed as competent and culturally there are strong ties to family life. The majority of students travel to Holland to complete their university degrees and stay on to transition into the Netherlands workforce, as they are able to secure adequate income to service student loans.
“The biggest hurdle for young professionals to come back to Curaçao is wage level,” explains Clark. In this phase of your life when you have finished your studies and you start working, you are thinking – how can I earn the most money to quickly reduce my student loan? In Holland you earn a much higher salary than here.”
Curaçao could benefit greatly from providing powerful incentives to attract this knowledge back to the island, sparking the next generation of entrepreneurs. In many cases, local businesses in Curaçao are not in a financial position to take on the burden of their employees’ student loans, and are therefore at a disadvantage in regards to attracting top talent. For Curaçao to be successful, a solution to assist with the burden of educational debt should be considered.

Combining the best of both worlds
Being able to export services is vital to the sound development of the economy and provides much needed foreign exchange. With the combination of local government’s new legislation to encourage the creation of new export services and Curaçao´s ability to partner with successful software companies in the Netherlands, the software service industry is an attractive segment to develop further on the island. Considering its vast resources, Curaçao has the potential to emerge as a leader in this market in the Caribbean.

1 Curacao eye on export official research report – Chapter 4
2 Press Release: Big Data, Analytics, and Cloud Drive Enterprise Software Growth, According to IDC. 22nd April, 2013. The Wall Street Journal: www.wsj.com
3 Curacao eye on export official research report – Chapter 4