Home » MRGLSI 2016: Business Services sector provides expertise to scale up operations

MRGLSI 2016: Business Services sector provides expertise to scale up operations

MRGLSI-2016-300x402Louisville’s Business Services sector acts sort of as an under-the-radar hero to all of the other industries that make the region thrive. Providing staffing to healthcare companies, IT support to manufacturers and web design to new startups, the Business Services sector is a huge enabler of the success of Greater Louisville and Southern Indiana. It is one of the five Business Clusters under Louisville Forward, that also include Advanced Manufacturing, Food and Beverage, Lifelong Wellness and Aging Care and Logistics.

Louisville is reshaping the way it handles economic development with Louisville Forward, the city’s integrated approach to economic and community development. Created in 2014, Louisville Forward combines business attraction, expansion and retention activities, and talent and workforce attraction, with the city’s real estate development, land use and planning and design functions to present a unified solution for job growth and quality of place.”
The region has a wealth of expertise in back office operations from human relations to insurance claims processing to order fulfillment to billing management. Major corporate entities operate national health insurance networks, manage international food service finances and conduct global shipping and order fulfillment. Also, the U.S. Army moved its human relations services center to nearby Fort Knox a few years ago.

More than 25,000 people are currently employed in the Business Services sector, which has seen 20 percent growth since 2003, according to Louisville Forward, the Louisville Metro Government agency that pursues and coordinates economic development. This cluster is expected to grow another 20 percent in the next 10 years, due to increasing demand and a strong workforce with the necessary expertise.

The Business Services sector helps support other companies, anything from a call center to human relations consulting. There is strong coordination with the region’s Lifelong Wellness & Aging Care cluster, due to the high concentration of headquarters. The high concentration of Business Services sector entities is assisted because there are many qualified candidates to work in these fields.

More than 41 percent of Louisville’s workforce holds an associate’s degree or higher, which tops the national average of 39 percent.

This wealth of qualified candidates is an especially valuable asset since workplaces are changing at a faster pace than any time in history. To address these evolving needs, the city collaborated with its workforce partner, KentuckianaWorks, to create Code Louisville, an innovative, public-private partnership that leverages online learning to train coders in front- and back-end web development. The goal is to train 850 coders by the end of 2018.

Mary Ellen Wiederwohl, Chief of Louisville Forward, noted that Business Services is one of the city’s fastest growing business clusters.

“Since business services jobs are needed at every business, we like to call this a ‘cluster mashup,’ ” she said. “For example, when one of Louisville’s leaders in healthcare needs to recruit and hire human resources professionals, the Business Services and Lifelong Wellness and Aging Care project managers work together to fill this need.”

Due to this strong cluster, the city was able to attract Computershare, the Australian stocks processor and employee share plan services provider, which made a $12 million investment that created 250 new jobs.

“Earlier this year, Thorntons announced a $27.8 million corporate Store Support Center in Louisville,” Wiederwohl added. “Thorntons is a convenience chain retailer that provides fresh foods, beverages and fuel. The expansion will create 101 business services jobs. Earlier this year, Passport Health Plan and Evolent Health announced the formation of a strategic alliance that will create The Medicaid Center of Excellence. The strategic alliance will create new jobs, generate additional tax revenue, and further establish Louisville as a center for health care innovation.

Business services one of 5 key clusters
Louisville Forward identified 5 business clusters as its areas of strength, where it has the largest presence of expertise and workforce and areas of promising growth. In addition to Business Services, there is Advanced Manufacturing; Food & Beverage; Lifelong Wellness and Aging Care; and Logistics & eCommerce.

“In terms of improving wages, the five business clusters together had an average wage that was around 28 percent higher than the countywide average,” said Wiederwohl. “The largest of the business clusters is Lifelong Wellness and Aging Care, with more aging care-related headquarters than anywhere in the world.”

Manufacturing has seen the biggest recent growth in employment. Since the low point of the 2010 recession, more than 14,000 jobs have been created. In the short term, over the past year, Logistics & eCommerce has seen the highest employment growth.

Louisville Forward provides all five sectors with support. Each has a designated project manager who works with businesses to identify their unique needs, like workforce development and site location, and help find solutions to make their business grow and thrive in Louisville.

“Project managers also provide concierge services, helping to facilitate any processes or decisions in other city agencies,” Wiederwohl added.

The idea and best practices sharing that occurs as a result of Greater Louisville’s industrious support sector results in innovation locally that improves business services across the nation. But it begins here.

Business support services may be lesser known than the Food & Beverage sector, which includes the skyrocketing premium Kentucky bourbon segment with distilleries such as Brown-Forman, Jim Beam, Michters and Heaven Hill and household-name fast food and fast casual chains such as Texas Roadhouse, Yum! Brands and Papa Johns, but it is no less important. Support services underpin so many other companies: anything from a call center to human relations consulting. Because today’s world is digital and work can be done from nearly anywhere, Louisville’s high quality of life coupled with its high value proposition for businesses gives it a competitive advantage over other cities.

Home to businesses such as human resources consultant Mercer and financial service company Jefferson National, many financial service and processing operations have proven Louisville’s strength in the Business Services cluster as a great place to do business.

Louisville is home to strong education growth in finance, business, marketing and related emerging areas. University of Louisville College of Business is ranked in the top 25 business schools, according to Princeton Review and Entrepreneur magazines. And Bellarmine University is home to the newly formed Institute for Advanced Analytics, one of the region’s first higher education institutions to offer a degree in Big Data and its analysis.

Workplace communication that works
Louisville tech startup Red eApp is finding a responsive market for the secure mobile business messaging platform it created for workplaces whose employees who aren’t desk based, and thus harder to communicate with. It arose and evolved into its current form as a direct result of interaction and idea sharing among members of the regional business services sector.

As a contained business communication app, Red e App addresses multiple issues that arise from relying on email and other older traditional modes. It is secure; companies control employees’ access and removal and can wipe their data; outsiders can’t see or send into the system; every message is read-verified to ensure it’s not missed; and it uses employees’ devices rather than the company’s.

Founder/CEO Jonathan Erwin said the growing company has raised $2.5 million from about 20 investors and expects to raise another $4 million to $6 million this year.

Red e App began in March 2011 with three employees and had 18 in its NuLu workplace in mid-April 2015, which Erwin said moves the company slightly past being a start-up – the indefinite time period when entrepreneurs are trying to assemble the financial means and a team to bring an idea to market and begin operations.

“We are having some of the biggest companies in the world calling us,” Erwin said.

Food and Beverage sector store locations are top prospects with employees who either don’t have email-friendly work stations or are too active to check it. Red e App’s broad potential market encompasses hospitals and clinics, manufacturing, retail, warehouse, transportation, hair salons and much more.
Email is today’s most common business communication method, but inboxes often hopelessly overflow.

Too little or too much email, said Patrick Goodman, chief product officer at Red eApp, both produce non-communication or message distortion in tone or content. Even in offices where everyone has a desk, company computer and email – where a typical day begins with: coffee, email and responses – managers who send an important email can have to spend too much time following up to see if everyone received, saw and read it.

“The problem is to match the technology to the user behavior,” Goodman said.

Success came after “the pivot.” Red e App has evolved significantly since Erwin began with a general notion of developing a mobile-based messaging product. He had been involved in hosting.com, a former Louisville digital technology business acquired by a private investment group in 2009.

Crowe Horwath LLP is a public accounting and consulting firm. (Brett Hait)
Crowe Horwath LLP is a public accounting and consulting firm. (Brett Hait)

Give the market what it wants
Apple had introduce the iPhone and its “applications” in 2007. It followed that in 2010 with the iPad tablet, and this new universe of smart phones, tablets and the mobile Internet propelled a blooming of new businesses such as Facebook, Twitter and others.

The general economy may still have been staggering from the late-2008, early-2009 recession and economic crisis, but Internet-based business was “in full swing,” Erwin said. “I knew I wanted to be in mobile,” he said, and began his business in 2011.

As he and Goodman met with and presented to various businesses in Louisville, however, they got feedback that the business market wanted a private mobile messaging platform – not the public system Red e App was developing. They realized they need to make a big pivot.

This somewhat painful dawning occurred in 2012, Goodman explained, when human resource managers with a local healthcare company complained that they had no way to communicate with 80 percent of their employees.

“You realize the market wants something different than what you have,” Goodman said. And this came about the same time the start-up also was facing its own major issue: “We have to make some money.”

“The pivot,” as Erwin and Goodman call it, occurred, and Red e App suddenly began to hit its stride. Valuable input came from the operators of a Louisville hair salon, Goodman said, who explained that email was not only too expensive for them, but regular employee turnover made it difficult to keep up with having new accounts activated and turned off through their contract IT service provider.

Additionally, company email accounts are subject not only to streams of non-work messages, such as when workers sign up for marketing deals or sports reports, but also to spam and even to security threats, such as phishing campaigns.

“When you get a message on Red e App, it is always about work,” Goodman said. Because managers too often are told their messages either weren’t seen or never arrived, they designed in read-receipt for every message that “you can never turn it off.”

Silicon Valley couldn’t have done this
Since the app system was designed from the outset to be very secure, Red e App messages comply with strict federal Health Insurance Portability and Accountability Act of 1996. This allows healthcare personnel to use it to discuss or to pass along private medical information, even attaching images of scans.

Red eApp includes a special alert tone to notify employees of emergency conditions.

Goodman said that Kentucky’s overall work environment with its higher proportion of healthcare, manufacturing, distribution and other non-desk, non-office jobs played a role in the creation of Red e App, a digital tool one might expect to originate from Silicon Valley.

“This technology could not be born on the West Coast,” he said. There are simply fewer workplace communication issues there, and the work culture is so different that potential investors probably wouldn’t relate to the need for the product.

In Greater Louisville, the work culture is ripe for the product, and the app is a prime example of Business Solutions at work in the region.

Going even more high tech
Another way that this sector can speed up the delivery of its services is if Louisville is able to pull off becoming a Google Fiber city.
“Louisville is on its way to becoming a Gig City, which is key to the long-term success of the Business Services sector,” said Wiederwohl.
It is a potential Fiber city now, and the Metro Council recently passed an ordinance that gives ultra-fast Internet service providers such as Google Fiber easier access to city rights-of-way, or in this case utility poles.

“This will help business locate here and grow here,” said Councilman Bill Hollander in a story published in the Courier-Journal earlier this year.