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Commentary: Aftershocks of the tech wreck

The flight of high-tech companies from San Francisco to less expensive cities shows that the 2001 "tech wreck" is not yet finished wreaking havoc on the industry.

By Michael Bell, Gartner Analyst

The flight of high-tech companies from San Francisco to less expensive North American cities is the 2001 "tech wreck" showing it's not yet finished wreaking havoc on the technology industry.

San Francisco was once one of the best

See news story:
When a city's cost is bad for business
cities in North America for a high-tech company to do business in. It's now one of the most expensive. Relocating could mean cost savings of up to 20 percent for some businesses, a dramatic reduction at a time when few have any fat to trim.

To remain competitive in a global economy, cities need to develop a best-in-class IT game plan. A "smart city" strategy involves three components:

• Collaborative community leadership (public and private) with a common vision and shared goals.

• A focus on leveraging the city's location assets (its sense of place) and its core competencies as reflected in economic clusters.

• The installation of a broadband communications network that connects citizens, local businesses and the global marketplace.

There are many smart cities and areas in the United States, such as Blacksburg, Va.; Silicon Valley, Calif.; Aspen, Colo.; Houston; and New York (even though it's struggling somewhat in the aftermath of Sept. 11). San Francisco is a smart city, but it's now too expensive.

The core of any smart-city strategy for balanced growth is to build a sophisticated information system that delivers a range of city services electronically and to adopt an aggressive economic development program that is entrepreneurial, balanced and based on collaborative relationships with the private sector. It can be a difficult balance to maintain in hard economic times, but that is what is needed.

Critical success factors in becoming a smart city are many. No. 1, though, is to learn from the lessons of other cities that have taken the same route:

• There must be within the private and public sectors a common vision and goals.

• Sophisticated business leadership is needed to plan and execute the city's transformational and IS strategies.

• Critical city processes must be re-engineered before any re-engineering of the IS architecture and applications.

• IT must be leveraged to deliver city services and establish a citywide platform for e-commerce.

• A collaborative strategy must be adopted with the private sector, and a customer service mind-set must exist for the delivery of city services.

• The city's location and economic assets must be leveraged.

Globalization and the connected economy are forcing cities to compete for international investment, jobs, suppliers and market share. To attract high-value businesses and skilled talent, or simply to keep the ones already there, cities must embrace the principles and success factors of a smart-city strategy. Those that fail to do so risk the possibility of stagnation and eventual economic decline.

(For related commentary on encouraging telecommuting, see

Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.