Technology & Biotech 2009

High Hopes: Some of Florida’s tech sectors are in position to benefit from a more frugal environment

By Mike Vogel

(Florida Trend, January 1, 2009) For three years, Clearwater-based software company iDatix has grown revenue by 40% to 50% per year. With recession fears and the credit crisis everywhere, founder Steve Allen might be expected to ratchet down his hopes this year.

He’s not. When a CEO believes his product cuts clients’ costs, he expects the clients to continue to buy. “People are a little slower about handing over the check,” Allen acknowledges. “It’s a little more difficult, but it’s not catastrophic. There’s more opportunity because people need to save money.” Allen’s outlook isn’t unique in the tech sector. True, traditionally a recession means tech buyers chop purchasing to preserve cash. But how 2009 shapes up for Florida’s tech companies depends on the sector they’re in and how they’ve positioned themselves.

For example, Melbourne-based Harris Corp., which employs 7,000 in Florida, expects profits to increase 19% to 22% this year and revenue to grow 8% to 10%. “We’re expecting another strong year in ’09,” says spokesman Jim Burke. Harris benefits from healthy demand for its specialty — reliable communication equipment. It also has big-ticket contracts with the FAA and U.S. Census Bureau and is reaping the rewards of strategies begun under six-year CEO Howard Lance to diversify, continuously introduce new products and push harder for international sales.

In contrast, Florida tech companies that catered to the real estate and financial services industry are suffering. Credit availability also is an issue for companies, especially young firms. “There are probably entrepreneurs sitting on ideas or they will just have to wait. I think probably everybody is anticipating that in the next six to 12 months we’ll be in a holding pattern for anything that’s in the works,” says Matt Doster, executive director of industry group ITFlorida.

Doster, however, sees opportunity for IT growth in healthcare — a focus of the presidential campaign — as the sector looks to lower costs and improve care and convenience. Agrees, Maryann Fiala, executive director of tech trade group AeA’s Florida Council, “The potential in that particular marketplace is enormous. That certainly could offset any softness we see from the financial market.”

Healthcare is in the sights of Amjad Shamim, managing partner and CEO of Fort Lauderdale-based AAJ Technologies. His software consulting company increased revenue more than 15% last year to more than $7 million. Like iDatix’s Allen, he isn’t lowering expectations. “It’s all about the business value proposition,” he says. He expects an 18% to 20% increase in revenue this year. He’s hiring — forecasting six full-time jobs added to his staff of 37.

Florida’s tech industry is made up of small companies such as Allen’s and Shamim’s, a silver lining in a slowdown because they’re generally more nimble than the massive companies found in other states.

Other Florida strengths in areas with some immunity from recession are aviation and aerospace, homeland security and defense, clean energy, life sciences and IT niches such as wireless, digital media and modeling and simulation, says Sena Black, senior vice president of marketing and strategic intelligence for Enterprise Florida. Says venture capitalist Craig Burson, of H.I.G. Ventures in Miami, “The state certainly has its pockets where there’s still opportunity.”

At iDatix, Allen, 45, is experienced in tough times. His personal bubble burst 18 years ago when as a young engineer-inventor his bright idea for a diet calculator ran head-on into his lack of business savvy. Wiped out, he went to work for others, switching from hardware to software and then started iDatix. Its products and services allow a client’s employees, including non-IT employees, to design and implement their own software automations of paper processes in fields as diverse as accounts payable, HR, compliance and other areas. “Our big mantra is land and expand,” he says.

Profitable after 18 months, the company has grown off of profits since then, reaching revenue of $3.7 million in 2007. ITFlorida named it the Small Business of the Year in October. “If there’s a recession, we’re choosing not to participate,” Allen says.

Biotech Payoff

Feeding off $650 million in state and local subsidies, Scripps Florida will complete its move into its new campus this year. Burnham Institute for Medical Research’s Lake Nona facility in Orlando is scheduled for completion this year. Torrey Pines Institute for Molecular Studies moved into its permanent Port St. Lucie digs in November. Palm Beach County sold the first bonds to raise the $194 million needed to land a Max Planck Society branch there beginning this year. And SRI broke ground on its St. Petersburg facility in October. “Life sciences have really grown quite phenomenally in Florida. They’re spawning spinoffs and startup companies. We think it’s going to continue to be a strong area for ’09. It’s been good. It’s going to continue being good,” says Sena Black, senior vice president of marketing and strategic intelligence at Enterprise Florida, the state’s economic development organization. The $500-million state fund that was used to entice Scripps Florida, Burnham and Torrey Pines here was zeroed out in the Legislature’s current budget. The Legislature did put up $30 million for a Florida Opportunity Fund to join with Florida-based venture capital firms investing in Florida businesses.

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