Bluegrass Market Review | Central Ky. talent proactively manages operations, finance, tech and cyber security

By Abby Laub

Business-Services_Integrity-IT

Modern business needs rapidly change and evolve. Best practices in cyber security, for example, look completely different than they did just five years ago, and Central Kentucky’s business service providers are equipped to handle the load.

“Clearly the biggest threat facing the businesses we serve is the risk associated with security incidents and breaches,” said Integrity IT President Phil Miller. “The sheer volume of threats is increasing at such an exponential rate that it demands our attention. The reason these risks should be taken so seriously is the potential financial impact on the affected business.”

Cyber security threats change quickly, Miller said, but can be managed by firms like Integrity IT and others in Central Kentucky. In fact, the sheer amount of technology services in the region is formidable.

“I think Central Kentucky has above average IT resources for addressing cybersecurity risk,” he said. “By above average, I refer to both quantity and quality of resources. Each year I attend a national IT service providers conference called IT Nation, and this past year one of the big themes was the growing need for managed IT security services. The keynote speaker asked for a show of hands – from among the thousands of companies represented – of companies that had established security consulting and managed IT security services. I was quite shocked to see that my hand was among a relatively small number of hands that went up.

“Central Kentucky has above average resources for addressing cybersecurity risk,” he said. “A few other IT companies in our area have also gotten out ahead of the curve in offering these services.”

Other notable Central Kentucky technology firms include SIS, Netgain, C-Forward, Coastal Cloud and Tactical
IT Group.

Even industries that don’t levy fines and penalties for security breaches need to consider businesses reputation, direct revenue production loss, data recovery costs, loss of customer data, and lawsuits.

Making companies run smoothly

Security is crucial, but there are other business services performed by Integrity IT and a local multitude of others like it that keep operations running smoothly in Central Kentucky. Ongoing hospital growth makes the healthcare market in Central Kentucky a key sector for IT firms.

“Our primary goal is to keep our customers up and running, anticipating the problems before they happen,” Miller said. “Twenty years ago technology wasn’t as important in everyone’s business as it is today. Healthcare is a prime example, where 20 years ago we were carting around paper records, and now everything is computer data based and accessed through electronics. Our primary goal is to make sure the things they utilize work optimally, so their users are able to be as productive as possible and they have no lapses in service.”

Being based in Central Kentucky facilitates being able to quickly serve customers around the state, but most problems today can be and are handled remotely to save more time and expense.

Part of the reason Lexington and Central Kentucky’s healthcare sector is booming is due to its optimal location and workforce ranked among the best educated in the nation. Those factors also create a ripe high tech and start-up environment.

Every year Lexington sees growth in its startup and technology communities, said Bob Quick, president and CEO of Commerce Lexington Inc., which supports economic development as well as chamber of commerce functions.

“We attribute this to our strong entrepreneurial ecosystem and the technological advances that spin out of University of Kentucky,” he said. “Lexington is consistently ranked as a great place for startups, as well as being recognized as the 14th ranked city with the fastest growing rate of startups according to the U.S. Census.” 

UK faculty conduct hundreds of millions of dollars in research annually in addition to educating 30,000 students.

Business helping business

Lexington-based MakeTime, which connects CNC machine tooling shops and customers with small-batch and specialty jobs, is a great example of a successful new startup that is busy helping other businesses. In September 2017, MakeTime announced the launch of the MakeTime Shop Advantage Program.

The program is the first of its kind and is designed to make technology, sophisticated hardware and business services more accessible to the U.S. manufacturing base, which contributes over $2 trillion to the U.S. economy annually. Inaugural partners include global 3D design software giant Autodesk; the world’s leading supplier of cutting tools and tooling solutions, Sandvik Coromant; multinational computer technology company Dell; supply-chain cost-reduction expert Transportation Impact; and manufacturing financing partner Manufacturers Capital, a division of Commercial Credit Group Inc.

Todd Pritts, chief product officer at MakeTime, said in a press release that manufacturers have historically experienced barriers to adopting new technologies and processes. MakeTime’s program will help machine shops bridge the technology gap faster and facilitate a more productive American manufacturing workforce.

“MakeTime’s mission has always been to refuel U.S. manufacturing,” he said. “We started by building technology that makes it easier for manufacturers to get parts made with American suppliers, and now we can go one step further and provide American suppliers access to the tools they need to get ahead, and stay ahead, of the technology curve in the global manufacturing climate.”

Oftentimes the key to getting startups off the ground is simply having a space to work, and leaders and fellow entrepreneurs in Central Kentucky are making this happen.

One of several stepping into that need is Base110, a modern co-working space in downtown Lexington, a spinoff of the popular tech-friendly Base163. Co-founder Tim Guthrie also owns OnTrack Management Group, which formerly operated at the UK Coldstream research campus. Guthrie himself needed a new office that was small and noticed move-in-ready space was difficult to find. So he helped make one happen.

“Our idea is to make this place and curate it around the creative and entrepreneurship community here in Lexington,” Guthrie said. “Right now, folks are scattered and in ‘silos.’ If they’re not in a group, they’re in their house or employed in another part of the country but want to be here. We want to bring it all together and let Base110 be a hub of creative activity, whether it’s arts or software development or business entrepreneurship.”

Each shared office space in Lexington – Awesome Inc. and The Plantory are others –has a unique feel and set of offerings for new or small businesses, he said. Some are incubators, some are simply a community-oriented space in which to do business.

“We’re not an accelerator like some of the other places are, but we do have opportunities for education, and our space is formal,” Guthrie said. Prices and spaces to suit anyone in the “gig economy” range from $49 per month all the way up to $950 a month.

Part of the draw for opening businesses in Lexington is because people simply want to live in Central Kentucky. A number work independently for companies based in other cities.

“A lot of people who have some experience with Lexington, they want to come back,” Guthrie said. “They come back and they’re bringing a company, or need to take care of parents or raise a family here. This is an opportunity for them to plug in to this community that we’re working in and start something.

“There’s a lot more openness to nontraditional work. Whether you’re an entrepreneur or someone who’s looking to be in a place as opposed to having a job and going somewhere for a job. How do you create a life that you want in a place you want to be? It’s a place and it’s not the job – it’s the place and the jobs come.”

Base110 and other shared-resource spaces are easy, low-barrier places to start a business, according to Guthrie.

And women helping women

Nancy Aichholz, CEO and president of Covington-based Aviatra Accelerators, also is interested in removing barriers for new businesses, specifically women whom she said traditionally are underserved in the startup game. Headquartered in Covington, Ky., Aviatra enables women to start and sustain businesses by giving them the resources they need to be successful. Aviatra aims to expand into the Lexington market in 2018.

Since 2010, Aviatra (formerly Bad Girl Ventures) has made a major dent, dishing out almost a million dollars in low interest loans, held dozens of educational seminars, served more than 1,600 women – about 1,000 of whom have gone into business on their own. The top five women between Aviatra’s Cleveland and Cincinnati markets had annuals sales revenues in 2016 totaling $68 million.

“We know we have a lot to offer the Lexington start-up and economic development ecosystem,” Aichholz noted. “Lexington is exciting because as a community it was built by entrepreneurs, start-up businesses that are now huge industries – bourbon, horses, tobacco farming.”

Another Northern Kentucky based firm expanding in Lexington is Covington-based C-Forward. C-Forward is dedicated to understanding an organization’s technology needs and goals, and delivering technology peace of mind through a personal and proactive approach.

In the research space, businesses have traditionally found great services at UK’s Coldstream Research Campus.

Executive Director George Ward noted that Coldstream’s campus is quite literally the gateway to Lexington’s high-tech, higher education corridor with connections to downtown Lexington and UK. The once-prominent horse farm at the intersection of 1-64 and 1-75 has transformed into a 735-acre hub of innovation and creativity.

“Coldstream is the location of choice for locally grown research and development companies and contributes to the city of Lexington’s vibrant entrepreneurial community, educated workforce, low cost of living, and high quality of life,” Ward said. “Coldstream companies include those working in biotechnology, pharmaceuticals, equine health and a variety of other business sectors. Many have ties to the University of Kentucky, including graduates of ASTeCC, UK’s high-tech business incubator. Others have licensed UK intellectual property or are clients of the (university’s) Von Allmen Center for Entrepreneurship.”

Coldstream’s mission is “Making lives better by creating new products, companies and high-tech jobs” and regardless of the company’s size, the No. 1 reason a company chooses to locate on a research campus is to have access to a talented workforce – namely university students and graduates. A second reason is to connect to a specific world-class researcher for sponsored research projects, Ward noted.

The largest companies with a presence at Coldstream include international firms like Komatsu, a Japanese heavy equipment manufacturer that recently purchased Joy Global; Piramal Enterprises, an Indian pharmaceutical company that purchased Coldstream Laboratories; and Open Text, a Canadian software and cloud computing company that purchased HP Exstream, a business support software provider. These companies are continually growing and expanding operations.

“Summit Bioscience, a nasal spray pharmaceutical manufacturer, has grown from less than 40 employees to over 60 in the last two years and anticipates growth to 100 people by early 2018,” Ward said.

A reliable source of support

One of the largest providers of business assistance to existing or new Central Kentucky companies is Commerce Lexington Inc., which emerged in 2004 from a three-program merger between the Greater Lexington Chamber of Commerce, Lexington United and the Lexington Partnership for Workforce Development. One of CLX’s most beneficial services might be its ability to connect expansion or location prospects with various local, regional and state incentive programs, such as the Kentucky Economic Development Finance Authority. And CLX is in the same building as The Bluegrass Alliance and the Lexington office of the Kentucky Innovation Network.

Other speciality networking groups include Bluegrass Biotech and the gaming-industry-focused RunJumpDev.

Another resource is Lexington-based Community Ventures, which was founded in 1993 and provides small and micro business support to a variety of companies, partly through mentoring and counseling. It also helps individuals own homes and live in vibrant communities.

To cloud or not to cloud?

As business moves services to cloud-based technology, several Central Ky. firms are available to help customers make decisions about which parts of the businesses to move to the cloud or keep on premise.
As business moves services to cloud-based technology, several Central Ky. firms are available to help customers make decisions about which parts of the businesses to move to the cloud or keep on premise.

Determining the extent of business IT services can be a challenging prospect for managers. Integrity IT President Phil Miller encourages companies not to necessarily give in to the marketing hype of cloud services. Cloud-based is simply a term that refers to applications, services or resources made available on demand via the Internet from a cloud computing provider’s servers rather than being based on a computer in your offices. Think: easy access, anywhere.

There are many services like this to consider when hiring a technology firm, but the key is to boil down what you’re trying to accomplish and the benefits you’re trying to gain measured against the cost to accomplish those feats, Miller said.

“There’s been an enormous amount of marketing around the cloud, and you’ve got these billion-dollar companies telling everyone that if you’re not in the cloud you’re doing something wrong,” he said. “What most people don’t realize, in almost every situation, our customers are already utilizing some type of cloud service whether it’s hosted email or spam filtering. The biggest question is whether to take everything to the cloud; that’s a very unique and specific question to every customer. I don’t have a standard answer to that question for everyone. We ask them to help us understand how they operate.”

He added that “going to the cloud” is not always cheaper and encouraged business owners to consider all of the factors of taking their business to the cloud, staying on premise, or a hybrid of both.

Serving the farms of the Bluegrass

The Blue Grass Stockyards serves the agricultural sector in Kentucky and beyond.
The Blue Grass Stockyards serves the agricultural sector in Kentucky and beyond.

A 70-year Fayette County tradition, interrupted by a devastating fire in January 2016, is now back in business as of fall 2017 at the new Blue Grass Stockyards. It’s a $600-million-a-year business with deep agricultural roots in the community.

“Blue Grass Stockyards is to cattle what Keeneland is to Thoroughbreds,” said Lexington Mayor Jim Gray at the September ribbon cutting. “It is the biggest cattle market group east of the Mississippi River. Because of its sales volume, it effectively sets the cattle price structure for the entire Eastern United States.”

In 2015, approximately 106,000 animals were sold at the Lexington market, plus another 50,000 sold on-line out of Lexington. Farmers were paid approximately $200 million for that livestock. Altogether, at its seven locations in Kentucky and through on-line sales, the market sells about $600 million in cattle each year.

The new stockyards is a one-stop shop for customers. Its 232,000-s.f. facility, located off I-75 near the Kentucky Horse Park, includes 40,000 s.f. of office and retail space. There’s a Regional Marketplace featuring more than 20 businesses, including Bromagen Commodities, a broker; the Chop Shop, a local meat market; a restaurant; clothing store; and all kinds of services cattle farmers need. There’s even an exhibit space.

This facility is crucial to farmers, whose services and products create a lot of economic activity in the region and beyond. A 2017 study that updates the findings of the 2012 landmark study “The Influence of the Agricultural Cluster on the Fayette County Economy” shows the agriculture cluster in Fayette County accounts for $2.3 billion in annual economic activity. One in 12 jobs is directly or indirectly attributable to the agriculture cluster, resulting in $8.5 million to the local tax base. The ag cluster generates an additional $1.3 billion in income, profits and dividends. Services like Blue Grass Stockyards are crucial in keeping this engine turning.

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