WorldCity Business Magazine

CEO Roundtable

by WC

CEO Roundtable

When government regulation is good news

Is too much regulation a bad thing? Not for some companies in South Florida.

Regulation. Many companies straddle the fence on this subject. It’s good if it brings a level playing field, clear rules and, in some cases, transparency. It’s bad if it’s going to cost them a bundle to comply.

For some South Florida companies, however, the benefits of regulation are clearer. Their businesses are set up to help other companies keep in compliance.

“Government regulation is driving a huge amount of business to us,” said Matt Haynes, CEO of IGEL Technology in Fort Lauderdale. “Compliance is a big business now and it’s going to become huge. If there’s one thing driving the IT business around the world, it’s compliance and security.”

He cited the Sarbanes-Oxley Act, which stepped up financial reporting requirements and regulations for publicly held companies in the United States, and the Health Insurance Portability and Accountability Act, or HIPAA, which established standards for data collection and electronic files in the health care industry. He also said Homeland Security directives, including one that will require a national identity card for workers at airports and seaports, are creating new markets and new tech needs for companies.

IGEL develops, produces and markets server-based computer systems as well as other tech products, some of which are focused on technology security and privacy. Haynes said IGEL saw global sales grow 150 percent over the last year to $20 million, with $6 million of the total coming from the United States. He expected growth to continue at an 8 to 10 percent pace.

Hospitals are an important part of the company client base.

The IGEL president joined three other top executives from multinational companies in South Florida at a recent CEO Roundtable to discuss their businesses, trends and the developments that keep them awake at night. WorldCity launched the monthly CEO breakfast gathering in 2004.

Lawyer Parker Thomson said his industry refers to Sarbanes-Oxley as “the Lawyers’ Relief Act” because of the business it has created for lawyers. “HIPAA also affects it,” said Thomson, a principal at law firm Hogan and Hartson. “Hogan has a great deal of regulatory work.”

Thomson noted that while the regulations are focused on U.S. companies, there is a spillover effect and companies operating elsewhere in the world as well as U.S. companies with operations overseas are acknowledging a need to comply, as well.

Abbas Sadriwalla, the CEO of Fort Lauderdale-based Wireless Logix Group, said security issues in particular have helped his company, which provides a range of wireless technology solutions. Concurring with Thomson, he said interest in security and compliance is not confined to the United States.

His company has spoken with Kellogg, Brown and Root, the construction and engineering arm of Halliburton Co., about barcode and tracking technology that would allow it to keep a live inventory of tools used at construction sites. He said railroad yards in India are interested in ways to keep track of containers. And Wireless Logix is working on a deal to provide services to Injazat, a big player in the Middle East information technology sector.

He said his business is also being helped by companies’ and governments’ desire to cut costs because technology is seen as one way to achieve that goal.

The fourth CEO at the breakfast, Luis Baraldi of Baral Group, a Coral Springs television production and distribution company focused on the Hispanic market, works in a highly regulated industry. But he said it is technology, rather than regulation, that is getting most of his attention. Like the companies that turn to Wireless Logix Group, Baral needs technology that will help keep costs down.

“About 20 to 22 percent of Baral’s cost is satellite cost,” explained Baraldi, who founded the company, which produces and licenses sports events, children’s show, news and other programming to Hispanic networks, Fox Sports and ESPN in Spanish, among other outlets.

“We’ve invested a lot in technology. But if I’m not efficient, if I don’t use the technology right, my costs rise,” said Baraldi, adding that the company hoped to boost its revenues by 15 to 20 percent annually. “Fiber optics, uplinks, downlinks it’s all expensive.

“Right now, we watch our budgets through freelancing,” he said, referring to program narrators, commentators and news reporters. “But we’re in a business with a lot of other players and that competition is very good. We have to be very careful about costs.”

Although IGEL’s Haynes was upbeat about his company’s future, he said there are still problems in the tech sector in South Florida. Echoing CEOs at past roundtables, he said his biggest challenge is finding and keeping tech talent. He said he’d like to hire as many as 10 new employees over the next 10 months.

“I just lost a great tech guy,” he said. “You’d think that with Florida International University and the Florida Institute of Technology there would be an abundance of tech talent here, but that’s not the case.”