This is an edited version of a discussion paper circulated in March 2001 on the role and rationale for government action to create the conditions that would enable the Island to take best advantage of emerging niche opportunities.

Executive Summary

Globalisation and rapid expansion in the use of Information & Communication Technologies are accelerating changes in the business environment. These changes are running ahead of the capacities of national regulatory and fiscal frameworks to adapt to new business practices and services. Opportunities for Jersey, both transient and longer-lived, continue to arise. However, competition is intense and Jersey will not win a share of this activity by default. The Island does have the potential to gain some element of this new business if it is able to marshal its strengths and overcome its weaknesses more quickly and to better effect then onshore and offshore competitors. This is unknown territory for everyone, including Jersey. The Island does not have any exceptional advantages although it does have some capabilities built up in the offshore financial services sector that can be applied to this area.

This discussion paper argues that:

It is necessary and practical for the key players in Jersey's private sector to collaborate on marketing in this embryonic phase if Jersey is to remain in the running. Such marketing also includes building support in Jersey.

There is a legitimate case for the States to pump prime this collaboration.

Current States involvement in marketing should be scaled down in favour of providing encouragement for the private sector to market the Island

We must act urgently and refine arrangements as the situation develops if this opportunity is not to be missed.

The Proposal

An interim marketing vehicle should be immediately established with membership open to any organisation concerned with ebusiness.

The marketing vehicle will be funded though membership fees which may be in kind to the extent that a member undertakes marketing activities that satisfy criteria that establish that the activity promotes the Island

The vehicle, as representative of the sector, will approach the States to secure additional funding. The substantial private sector funding (much of which may be in kind) will establish a case for the States to contribute.

Relevant activities by members, such as publishing articles, presentations to conferences etc. will be part funded by the vehicle.

Governance and accountability will be established through a board elected by members, without remuneration. Voting rights will be linked to membership subscriptions subject to limits that prevent dominance by one or two members.

No permanent executive staff will be employed although some effort will be required to co-ordinate and organise.

States rationale for funding

There are several arguments in favour of States funding this activity:

Economic

The benefits of e-business activity in the Island are likely to be dispersed among legal advisors, telecoms provider(s), IT services businesses, providers of corporate services, auditors, logistical service providers. Indirectly, further businesses will benefit. However, this wide dispersal of the benefits may not generate the incentive within individual businesses to do pioneering work in developing these markets commensurate with the overall payback to the Island. Although this rationale may seem arcane, it is essentially this "market failure" argument that is put forward to justify government funding for tourism marketing. In Jersey's case justifying something approaching £8 million per annum.

Political

The States already fund marketing activity via the Information Society Commission in the form of sponsorship, attendance at conferences, funding the e-team portal advertising and retention of PR services. This proposal does not introduce a new practice. The principle of States funding is further established not only in the case of tourism but also in regard to financial services in the form of the funds earmarked for Jersey Finance Limited, replacing the PR work of the Jersey Financial Services Commission.

Effectiveness

The matched funding approach is more effective than the current approach in that it will open the door to increased private sector contribution, reduced duplication of effort and better management of scarce marketing expertise. The proposal will allow those with the relevant expertise and insight to ensure the funds are put to best use.

The marshalling of private sector skills and resources will also reduce the demands on the IS Strategy Advisor allowing him to devote more attention to other Information Society initiatives including the e-government and education / training.

Practical

This proposal has a clear precedent in the Jersey Conference Bureau, which operates successfully along these lines to increase the volume of conference business that the Island wins. It demonstrates that there is scope for collaboration among ostensible competitors and co-funding through the public sector.

The tenure of office of the States IS Strategy Advisor is nearing its end creating the occasion to revisit existing arrangements.

Strategic

The Island's economy is highly dependent on offshore financial services and tourism. This is to some extent inevitable in that these are the principle niches in which Jersey can partly offset the competitive disadvantages faced by small islands. Nonetheless the lack of economic diversity creates vulnerability and limits the career opportunities for Islanders. E-business builds on the competitive advantages that have sustained the finance sector. Although it therefore shares key vulnerabilities of the offshore financial services sector it does add a degree of diversity in terms of both the range of activity and career opportunities. In concrete terms, participating in the creation and operation of B2C or B2B services is somewhat different in character to wealth management or administration. Existing offshore financial services firms also will increasingly seek to employ technologies that are though of as the constituents of e-business creating complementary demand for these capabilities and competencies.

Scope for Marketing Collaboration

Marketing, in its widest sense, encompasses a wide range of activity. The principle activities that are suited to collaboration through the suggested vehicle are:

Promotion

Wide ranging promotional activities targeting groups including entrepreneurs, corporate strategic decision makers, venture capitalists, and professional advisors are suited to collaboration. Various communications channels will be used, including submission of articles and advertising in relevant periodicals, presentation of papers at conferences and symposia, provision of stands at exhibitions, direct marketing, cultivation of contacts though meetings, maintenance of web presence. A substantial part of these activities are well suited to collaboration. At a minimum this will ensure that consistent messages are conveyed duplication is reduced, coverage maximised and activity better targeted at the right groups via the most appropriate medium.

In practical terms, individuals would continue to present papers at conferences and submit articles as before. The vehicle would merely bring a degree of co-ordination and co-operation to this activity so that wider, deeper coverage is achieved.

Understanding Markets & Customers

Understanding this complex and rapidly developing arena is a major challenge in itself. The basic work of intelligence gathering including monitoring trends, competitors, analysis of this information and brainstorming for opportunities includes much activity that can be undertaken jointly, even though some aspects will not be suited to collaboration. Collaboration will include pooling of intelligence gathering and a mechanism for sharing information and analysis (e.g. controlled access web based repository).

Product Development

Some product development will depend on collaboration. The most obvious of these situations is the identification of opportunities that arise from regulatory aspects where Jersey may be able to create an appropriate regime more quickly than its larger neighbours.

Planning

Some collaboration in regard to planning will be desirable, for example in identifying likely needs for skilled resources, which should feed through into the training and regulation of undertaking policies of the States.

Public Relations

Finally, the need to develop awareness and support locally among key groups, including especially politicians. Without a substantial and coordinated investment in this activity the fledgling sector will be unlikely to enjoy the support needed to overcome inevitable resistance.

Individually, Island firms have capabilities in some of these areas but few, if any can span the complete set or have the risk taking appetite to make the investment needed in view of the risks of these new ventures.

Structure, Control & Funding

As the vehicle will be a forum in which competing firms are collaborating the structure must be entirely open and able to engender trust. The proposal will stand or fall on the ability of members to agree upon such a structure. The task is not easy and existing conflicts may be a stumbling block. However, there is no doubt that it is possible for competitors to collaborate in the manner envisaged and the Jersey Conference Bureau provides a successful local example of the viability of such vehicles.

Level Playing Field Access to Leads

Collaboration raises concerns in regard to the way in which business leads will be handled. In particular if some members are able to cherry pick or otherwise restrict access to leads generated then the vehicle will not engender the confidence required to open doors to collaboration. This is a very significant concern.

Accountability to members will be established by electing the governing board. This will go a considerable way toward curtailing the ability of individual members to exploit the vehicle to further their interests at the expense of other members. Voting rights might be allocated by developing a formula that will be acceptable to all parties that will allow voting proportional to member fee contribution subject to a ceiling (and perhaps floor). The board can be guided in its decisions by policy statements, prepared in consultation with members, to maximise transparency. Such policy statements will form the basis for decision taking in regard to membership contributions, funding applications etc. The structure will not be flawless, and in particular smaller members may need to act in concert to counter dominance by larger members. Nonetheless a workable arrangement is conceivable.

Furthermore, standardisation of promotional material (literature, website, advertisements) will ensure leads have at least some awareness of the range of competing businesses offering services even though, in each particular case, the spotlight will be on the firm establishing contact (giving the presentation, writing the article, visiting the advisor etc.).

Member Funding

To realistically open the door to States funding it will be necessary to demonstrate the full extent of private sector funding that the vehicle receives. However, much of this funding could be in kind activity. Precedents for such arrangements can be given drawing on practices elsewhere if necessary. For example a firm might arrange to speak at a conference. If this presentation meets board policy requirements (e.g. includes representation of the wider role of Jersey and includes distribution of the common marketing literature) then this could be counted toward membership subscription. This might, for example, be based on a formula related to the chargeable time extended preparing and presenting. The value attaching to such in kind contributions would be subject to acceptance by the governing board. Similar arrangements would be available for those publishing articles, placing ads etc.

Access to Funding

Activities by members that promote the Island as a location for e-business would be eligible for part funding by the marketing vehicle. In practice the level of funding would be dependent on the scale of the States contribution and costs attributable to the limited amount of joint activity such as:

production of literature and simple website incorporating links to members own sites.

Intelligence gathering and distribution costs

Coordination and planning

Decisions on funding will also need to be taken in a transparent manner that engenders trust among the members. A formula might be devised that relates to the relevance and size of the audience reached in a way that is acceptable to members.

Accountability to States

To retain accountability to the States, in recognition of the public funds entrusted to it, the vehicle will prepare an audited annual report. This will be used to demonstrate the effective use of those funds to promote the Island. As the States will be able to discontinue funding at any time if there are legitimate concerns that funds are not being used in the Island's interest this should provide a reasonable safeguard over public monies.

Vehicle

A trust may provide a suitable vehicle for the initiative in that the objects can be framed so as to engender the support of all members and trustees will have a duty to ensure that these objects are adhered to. Trustees also have a duty to ensure that their own interests do not affect decisions. These duties will be enforceable by the courts should members have concerns over trustee conduct.