Financing of cluster organizations

Financing of cluster organisations

© Clusterland Upper Austria Ltd. page 2

Introduction

What you will learn today

Overview about financing systems of cluster organisations

From public to private financing of cluster organisations

Tools for further development of cluster organisations

Financial planning & controlling

© Clusterland Upper Austria Ltd.

Structural change in Upper Austria

page 3


Structural change in Upper Austria

page 4

Low level of innovationStrong Labor

unions

Inefficient

structures

„Global

Player“

Efficient

structures

High level of

innovation

High

growth

rate

4,5% (2011)

Low

unemploy-

ment rate


Upper Austria has a systematicinnovation strategy• Strategic programme „Upper Austria 2000+“

1998 – 2003

3 strategic areas

Programme volume: € 300 m; Upper Austrian contribution: € 80.8 m

Approx. € 20 m for cluster setup

• Strategic programme „Innovative Upper Autria 2010“

2005 – 2010

5 strategic areas

Programme volume: € 600 m; Upper Austrian contribution: € 200 m

Approx. 5% for professionalising of cluster and network initiatives

• Strategic programme „Innovative Upper Austria 2010plus“

2010 – 2013

5 strategic areas

Programme volume: € 450 m; Upper Austrian contribution: € 150 m

• Strategic economic and research program „Innovative Upper Austria 2020“

2014 – 2020

4 key strategies (site development, industrial market leadership, internationalisation,

technologies of the future)

5 fields of activity (industrial production processes, energy, health / aging society,

food / nutrition, mobility / logistics)

Programme volume: € 1,35 b; Upper Austrian contribution: € 450 m

18 June 2014


Foundation of clusters & networks

18 June 2014

19981999

2000

2002

20032004 2006

2009Until 2009-11 „Network

Environmental Technology“

PlasticsAutomotive

Furniture & Timber

Health Technology

Mechatronics

Resource- andEnergy Efficiency

EnvironmentalTechnology

Human Resources

2013

Information Technology

Ecoenergy(Upper Austrian

Energiesparverband)

Food(Upper Austrian

Chamber of Commerce)

Logistics(Association for Network

Logistics)

(since 2005)

© Clusterland Upper Austria Ltd. 18. Juni 2014© Clusterland Oberösterreich GmbH

Seite 7

„Matrix“ Servicing of Upper Austrian Companies


Financing of Clusters and Networks

• Different financing models


Financing of cluster organisations in starting phase

At the beginning the responsible body for cluster management should

have a sufficient budget from public authorities to conduct

significant projects without seeking separate funding

Well-funded cluster organisations in the starting phase are more likely

to pursue certain objectives, including building up the network, first

cooperation projects, first qualification and training activities

They are better off in increasing cluster size and in improving

competitiveness by initiating first cooperation projects as they don’t

have to struggle for additional funding

BUT: Make sure to charge fees for offered cluster services from

the very beginning!


Sustainable financing models for cluster initiatives

Generally, there are three different types of financing:

Open-end public funding

Some groups share the opinion that permanent subsidisation can lead to

inefficiency in cluster management and cluster organisations. Interestingly,

representatives of this argument are not only to be found in the corporate sector

but in the institutional sector as well.

Temporary public funding and complete shift to private funding

Other groups are of the opinion that the cluster organisations should be

limited in time in order to prevent the possibility of permanent subsidisation and

should also allow room for industry driven investment. At a certain point of

time public authorities deboard as primary investors and companies or other

private institutions come into play.


Sustainable financing models for cluster initiatives

Public / private funding

A cluster organisation could be financed with public money in combination

with services against payment. In the course of time the public funding will

decrease and the contribution of the companies will rise.

Often a cluster organisation is planned and (co-) funded by the regional authorities

for a period of 2-5 years with the objective of extending the funding of further 2-5

years. After these years, the cluster should mostly be self sustainable and hardly

any more government funding should be needed.

In our opinion it is very difficult that public (gouvernment, etc.) bodies can

deboard as funding partners for the cluster after only 2-5 years. They will have to

subsidise the cluster at least to some substantial extent (10-50%) to get out

real benefits of clustering (clusters are a long term strategy to boost regional

economy!!)


Development of self-financing rate of Upper Austrian cluster initiatives

Substantial contribution at the beginnig from the local government

(Upper Austrian government‘s “Fund for the Future”) – € 20 million

from 1998 – 2005; € 15 million from 2005 – 2010; 6,4 million from

2010-2013

Strong commitment to a private-public-partnership (PPP) financial

system from the beginning

Steady increase

in the level of

self-financing

to 70+ %

at a rate of rd.

10 % per year


Development of self-financing rate of Upper Austrian cluster initiatives

Rise in sales (membership fees, services, projects etc.) by +336%

(2005 = € 1,266.203 up to 2012 = € 4,255.951 => + € 2,989.748)

Increase in marterial costs by +37%

(2006 = € 1,946.695 (2005 is not compareable) up to 2012 =

€ 2,677.876 => + € 731.181

Increase of personal costs by + 23%

(2005 = € 2,164.424 down to 2012 = € 2,658.735 => + € 494.311)

Rise of self-financing-rate from 42% in 2005 up to 75 % in 2011

Rise of self-financing-rate up to 95,3% in some clusters in 2011


Distribution of revenues Clusterland Ltd.2011


From public to private financing of cluster organisations

• Example Mechatronics Cluster

page 15


Financial development of MC 2006-2011


INFORMATION & COMMUNICATION

Quarterly journals, partner profiles, company visits, etc.

Revenues 2006 – 2011 from € 2.670 to € 37.010 -> + 1.286%

Cost of Materials 2006 – 2011 from € 17.300 to € 22.843 -> + 32%

QUALIFICATION & TRAINING

Conferences, experts & regular meetings, company tours, seminars, event management, etc.

Revenues 2006 – 2011 from € 85.060 to € 176.048 -> + 107%


COOPERATION

Initiation, project management services, moderation of experience exchange groups, etc.

Revenues 2006 – 2011 from € 6.660 to € 59.600 -> + 795%




MARKETING & PR

Info-materials, fairs & exhibitions, marketing & pr services, location/sector marketing, etc.

Revenues 2006 – 2011 from € 9.470 to € 63.586 -> + 571%


INTERNATIONALISATION

Participation in international projects, exhibitions, etc.

Revenues 2006 – 2011 from € 15.132 to € 102.692 -> + 578%


INTERNAL

Advisory board, membership-fees, internal organisation, cooperation with other regions etc.

Revenues 2006 – 2011 from € 91.706 to € 213.817 -> + 133%

Cost of Materials 2006 – 2011 from € 3.947 to € 52.849 -> + 1.238%

TOTAL

Revenues 2006 – 2011 from € 210.700 to € 672.370 -> + 219%





• Financial planning and controlling


Financial planning and controllingSubmission of budget, 30.11.

Annual report for regional government

Supervisory Board

Meeting,

recommendation of

company statement

Kick-off Planning &

Strategy Process 22.3.

Development / Planning

of Cross-Cluster

activities (B04-E05)

Mid-term check of MbO

interviews (B-E05)

Strategy Meetings of

Clusters/Networks

(M05-M07)

Supervisory Board Meeting, recommendation of annual

estimate (M06)

Annual estimate for

regional government + 3 year forecast (B07)

Strategy Meeting Cluster/Network-

Managers

Budget planning of

clusters/networks (M07-E08)

Mid-term report for reg.

government, forecast for

regional funding (M08)

Budget consolidation (B09-

M09)

Budget finalization (M09-

B10)

Supervisory Board Meeting, approval of

budget and activity plan (B11)

MbO interviewsexecutives (CM/NM)

MbO interviews

employees

270°Feedback,

exchange of MbOtargets

Planning Cycle

Company Info-Meeting 1





Financial planning and controlling

Repayment by regional government of Upper

Austria

Revenues from companies and

projects

Total: xxx.xxx €


Sources of government grants

Total: xxx.xxx €

Repayment by regional

government of Upper Austria

Revenues from companies and

projects

EFRE Fundings

Budget of Ministry of

Economics of Upper Austria

6 Clusters

2 Networks + 1 Cluster




Former financing system of cluster organisations




Financial planning

Shareholder define the general conditions (funding, degree of self financing

ratio, budget and general conditions for number of employees)

Cluster teams prepare annual financial and activity plans in coordination

with the advisory boards

Monthly cost accounting from the finance department

Inter divisional quarterly and annual controlling reports with a medium-term

and long-term review and outlook




Controlling

Annually two meetings of the advisory council of the Clusterland GmbH

Annually three meetings per year of the advisory boards (AC, KC, MHC,

GC, MC)

Monthly inter divisional meetings of the cluster managers

Monthly inter divisional meetings of the project managers

Weekly meetings of the cluster teams


Environmental Technology

Cluster

Organigram

18 June 2014© Clusterland Upper Austria Ltd

General AssemblyTMG

Upper Austrian Chamber of CommerceFederation of Austrian Industry

ManagementWerner Pamminger

AutomotiveCluster

Wolfgang Komatz

MechatronicsCluster

Christian Altmann

PlasticsCluster

Christian Altmann

Furniture &Timber

constructionCluster

Erich Gaffal

Health TechnologyCluster

Philipp Wittmann

InformationTechnology

Cluster

RobertStubenrauch

A. BoardSpeaker: Ing.

RudolfMark

Advisory BoardSpeaker: Josef Kinast

Network Resource- and

EnergyEfficiency

A. BoardSpeaker: Mag.

UlrikeRabmer-Koller

Network Human

Resources

AndreasGeiblinger

A. BoardSpeaker: DI Dr.

FriedrichKastner


Roland Ragailler


Michael Farthofer

A. BoardSpeaker: Prok.

WolfgangRathner

A. BoardSpeaker: Ing.

Manfred Huemer

ManagementServices

AndreaHeiml

CoordinationEU Projects

Werner Pamminger

A. Board

Elmar Paireder


Revenues:-Turnover with activities- partner fees- project revenues- public subsidies

Costs:- personnel- materials

Contribution:- IT- Acounting- Human ressources- Monthly rent- Other indirect costs

plan/actual costcomparison

Financial outlook

Clusterland Oberösterreich Ges.m.b.H.

Beschreibung

Vorjahresvergleich Ist-Plan / VergleichJahresvorschau

IST - VJ ISTAbweichung

PLANAbweichung

absolut in % absolut in % IST Budget Vorschau

01-03/2007 01-03/2008 01-03/2008 2007 2008 2008

UMSÄTZE

Erlöse 328.705 243.426 -85.279 -25,9% 249.831 -6.405 -2,6% 1.265.658 1.307.117 1.307.117

Partnerbeiträge 155.619 172.488 16.869 10,8% 186.498 -14.010 -7,5% 653.591 692.990 692.990

Förderungen (EU, Bund, Sonstige,..) 435.163 146.326 -288.837 -66,4% 189.119 -42.793 -22,6% 748.487 522.837 522.837

Bestandsveränderung -216.133 32.399 248.531 -115,0% -52.517 84.916 -161,7% -180.943 -31.217 -31.217

Zuw. Bewertungsreserve 0 0 0,0% 0 0,0% -21.529 0

Aufl. Bewertungsreserve 0 1.225 1.225 100,0% 1.225 100,0% 637 0

Basis Netzwerkförderungen 100.715 120.567 19.852 19,7% 125.000 -4.433 -3,5% 487.394 500.000 500.000

Abgangsdeckung Sonderaktivitäten 0 18.288 18.288 100,0% 51.406 -33.118 -64,4% 0 205.632 205.632

SUMME UMSÄTZE 804.069 734.718 -69.351 -8,6% 749.337 -14.618 -2,0% 2.953.294 3.197.359 3.197.359

KOSTEN

Direkte Personalkosten -538.578 -522.533 16.045 -3,0% -564.811 42.278 -7,5% -2.110.659 -2.172.388 -2.172.388

Direkte Sachkosten -333.156 -397.381 -64.224 19,3% -457.557 60.176 -13,2% -1.851.876 -2.007.742 -2.007.742

SUMME DIREKTE KOSTEN -871.735 -919.914 -48.179 5,5% -1.022.368 102.454 -10,0% -3.962.534 -4.180.131 -4.180.131

0 0,0%

DB I -67.665 -185.196 -117.530 173,7% -273.032 87.836 -32,2% -1.009.240 -982.772 -982.772

Direkte Verwaltungskosten -66.491 -83.729 -17.238 25,9% -90.369 6.640 -7,3% -316.016 -361.728 -361.728

DB II -134.156 -268.925 -134.768 100,5% -363.401 94.476 -26,0% -1.325.256 -1.344.500 -1.344.500

UMLAGEN

Umlage I (aus CL) 0 0 0 0,0% 0 0 0,0% 0 0 0

Umlage II (aus WV TMG) 0 0 0 0,0% 0 0 0,0% 0 0 0

SUMME UMLAGEN 0 0 0 0,0% 0 0 0,0% 0 0 0

Abgangsdeckung Kernaktivitäten -134.156 -268.925 -134.769 100,5% -363.401 94.476 -26,0% -1.325.256 -1.344.500 -1.344.500

Selbstfinanzierungsgrad 75,0% 59,4% 15,6% 51,5% -7,9% 57,6% 54,9% 54,9%

Summe Betriebsleistung 938.225 1.003.643 1.112.737 4.278.550 4.541.859 4.541.859

Summe Gesamtkosten -938.226 -1.003.643 -1.112.737 -4.278.550 -4.541.859 -4.541.859




Overview about selffinancing ratiodevelopment in eachdepartment


Report for Supervisory / Advisory Boards


Contact & Information

Christoph Matthias Reiss-SchmidtHead of International Projects Clusterland Oberösterreich GmbH

Tel: +43 732 79810-5157Fax: +43 732 79810-5110Mobile: +43 664 8186586E-Mail: [email protected]

Clusterland Oberösterreich GmbH supports cluster and network initiatives. It

promotes innovation through cooperation and competence in order to enhance the

competitiveness of enterprises.

All Rights reserved, especially the rights to copy, to distribute or to translate. No part of the slides may be reproduced, copied or

distributed in any form or by any means without prior written permission of Clusterland Oberösterreich GmbH.

18 June 2014


Coffee Break: 15:30-16:00

18. Juni 2014

Seite 32


16:00-16:30 Group work: How to measure success of Cluster organizations

page 33


16:30-17:00 Presentation of Group work results and discussion

page 34

Evaluation & measuring tools of our cluster organisations performance


Introduction

• What you will learn today

Overview about the evaluation and performance measurement

system within COG

Different requirements concerning reporting

Key performance indicators to trigger network success

Customer satisfaction/retention evaluation process

Customer Segmentation


Monitoring

•• How to report success of cluster organisations


Willing-ness of

companiesto contribute

Self financing

Regularanalysis ofcustomer

satisfaction

DifferentInput-Output indicators (partnercompanies, cooperation projects,

event participants…)

LEVEL OF ACTIVITIES qualitative/quantitative

How to measure success of clusters andnetworks?

page 3


Requirements on evaluation & measuring tools are manifold

page 39

Interested Environment

Evaluation &

Performance

Measurement

Internal• CEO• Cluster and networks• Advisory board• Supervisory board

External• Politicians• Stakeholders

• Media

• Partner companies

• Associations

AdvisoryBoards

Government

Upper Austria

TMGInternat.

Cluster-Orgas

SupervisoryBoard TMG

Federal

Association of

Industry

Chamber of

Commerce

Cluster-Managers

PartnerCompanies

AC

Politicians

Internat.

Consultants

CEOClusterland

EU

Nat. Cluster-

Strategy

Employees

CEOTMG

State Minister

of Economic

Affairs

Governor of

Upper Austria

PartnerCompanies

KCPartner

CompaniesMHC

PartnerCompanies

GC

PartnerCompanies

MC

PartnerCompanies

NDMPartner

CompaniesNUT

PartnerCompanies

NHR

Potential

Partner

Companies

Potential

Partner

Companies

Ministry of

Economy

Ministry of

Technology

Statistical Data

MediaSeveral

Associations


Different reporting tools/systems to meet various interests

• 4 different systems for performance measurement and

evaluation

Report for Supervisory/Advisory Boards (quaterly)

Report for Upper Austrian Government (semi-annually)

Report on Key Performance Indicators (quaterly, annually)

Customer Satisfaction Evaluation (annually)


Idea: comprehensive information service about Clusterland for various needs

Content / Evaluation and

Performance DATA

Report forSupervisory/Ad-visory Boards

Report forUpper Austrian Government

Report on Key Performance

Indicators

Customer Satisfaction Evaluation

Policy

level

Internal

Use

Public level

EU level

Company

level



• Regular information about cluster and network activities

Published on a quaterly basis

Information about

events, trainings, seminars

submitted cooperation projects, finished cooperation projects

special activities (like awards, marketing campaigns, etc.)

submitted national and international projects

Additional information for Advisory Boards

comparison of target and actual business results (traffic-light system)

forecast for the rest of the year


Report for theUpper Austrian Government

• Regular information about cluster and network activities and

financial situation of clusters and networks

Published on a half yearly basis

Information about

events, trainings, seminars

submitted cooperation projects, finished cooperation projects

special activities (like awards, marketing campaigns, etc.)

submitted national and international projects

detailed comparison of target and actual business results

detailed forecast of financial situation of the individual cluster and networks

overview about main key performance indicators



Detailed comparison of target and actual business results

Personnel and personnel operating figures

Order situation of regional/national and EU funded projects

Investments

Financial situation

Profit and loss statement

Statement of financial condition



Detailed forecast of financial situation of the individual clusters

and networks

Turnover (revenues, membership fees, subsidies, annual basic funding)

Costs (personnel costs, non-personnel-costs)

Administration costs

Cost allocation of TMG and COG

Self financing ratio

Required basic funding by regional government


Report on Key Performance Indicators

• Regular information about key performance indicators to

evaluate

• cluster and network success

Published on a quarterly and annually basis

Information about

Cluster / network structure

Information/communication and qualification

Cooperation projects



Detailed catalogue on key performance indicators like

Percentage of SME within cluster / network

Average annual partner fee within cluster / network

Number of producing partner companies or retailers

Number of new partner companies within period / number of leaving partners

within period

Average R&D quote within cluster/network

Number of press reports in professional journals about cluster / network

Number of participants within events since establishment of cluster / network

Number of hosting delegations from abroad

Project volume of cooperation projects since establishment of the cluster /

network…


Evaluation

•• How to measure success of cluster organisations


Customer satisfaction evaluation process

• Evaluation

Clusterland has undergone regular evaluation processes since

the establishment of cluster organisations in 1998

1999: Strategic programme Upper Austria 2000+, specific focus on cluster

organisations

2001: External evaluation of all Upper Austrian clusters, specific focus on

clusters in the Upper Austria innovation network

2003 - 2006: Individual analysis of cluster organisations (e.g. master thesis,

academic analysis from universities in Linz , Vienna and Graz)

2007: First complete partner survey (all cluster partners were asked the same

questions) => owners of Clusterland decide to do the partner analysis on a

regular basis (http://www.market.at/)



• Overview of results of Clusterland evaluation 2007 – evaluation

• concept

One key objective in the mid-term strategy of Clusterland Upper

Austria is to carry out partner surveys and analysis on a regular

basis – to elaborate a customer satisfaction / customer retention

index

Internal group within Clusterland worked out a detailed concept

together with the Institute for Retailing, Sales and Marketing

from the university in Linz



• Overview of results of Clusterland evaluation 2007 – evaluation

• concept

Key objectives

Customer satisfaction index

Awareness of offered services

Quality of offered services

Customer service

Ideas and demand for further services

Based on the experiences made 2007 Clusterland will now carry

out evaluations on a regular basis together with professional

opinion research institutes


Customer satisfaction evaluation process• Highlights 2007



• Lessons learned from evaluation 2007

Strong interest among automotive, plastics and mechatronics to

work together with each other

Social Network Analysis in the automotive, plastics and mechatronics

industry to learn more about connections and further cooperation potential

Cross-cluster/cross-network activities (e.g. joint advisory board meetings,

common events, trainings and seminars)

Companies lack certain standard of network competence

Show and communicate success stories of cooperation projects

Training / workshops to enhance network competence within cluster companies

5_Wertschöpfungsne

tzwerk.pdf

Social Network

Analysis Picture.pdf

080131_Beirat 048.jpg

080131_Beirat 019.jpg

Folder_Energieeffizienz_Druck_WEB.pdf


Customer satisfaction evaluation process• Highlights 2009 – Customer retention index




Customer retention

The more partners actively participate in cluster activities, the higher customer

retention is

Rise / improve contact with partner companies, active cooperation initiation

C3 - Cooperation Competence Center – Innovation through

Cooperation

There is a need / desire for better assistance within cooperation projects (from

initiation of project consortiums to project management to finishing of

cooperation projects)

Set-up of an internal working group to develop of a cooperation oriented service

portfolio


Professionalization of cluster servicesInnovation through Cooperation

Yesterday Today Tomorrow

Market demand

Offered product/ technology

portfolio

Distribution of value

creation on more

and more

companies

increasing needfor cooperation

Lessons learned from evaluation 2009



Initiation• seize actual sector/branch topics• concretise cooperation potentials• search for cooperation partners• consulting for financing and funding

Planning• definition of project framework• creation of cooperation group• clarification of roles and targets• assistance with action-, time and

cost-plan

Implementation• project management and controlling• organisation and moderation of

meetings• neutral interface• contact for expert know-how

Finalization• final project meeting• evaluation of project success• dissemination of results• future cooperation potential




We are the competence center for co-operationfor business networks

We initiate and support cooperation





Lager networks – more projects – less time for partner service

Clusters/networks have grown since 2009, more projects have been initiated,

same ressources in terms of FTE‘s

-> partners tend to claim about too little time spent by cluster personell for

caring about their needs and desires

Customer Touch Points – ABCD-Classification of Partners

Strategic planning & management of Customer Touch Points

ABCD-Classification of Partners in each cluster

New CRM-System -> DUKE


Selection of business domainDiscussion

What are specific capabilities (bundels of skills and ressources) in your

organization?

Which benefits do you want to provide whith these capabilities to the customer?

Who is potentially interested in these benefits, with whom do you want to work

together?

Where/In which field of business do you want to be active?page 72


Customer segmentation


Why customer segmentation is important

The 3D View – Three Dimensions of Competitiveness

All three of them are important, but you can only excel in one – and

should therefore choose your focus

Competitive edge based on cost (and price competition)

is not sustainable in the long term: product leadership

is short-lived, too

Technology moves fast and even products that are not

overtaken are easily replicated

Customer centricity is about long term relationships,

therefore provides sustainable advantages

It also results in added competitiveness in the other two dimensions


Different customers by value



„sleeper

agent“„copy-cat“

„heavy

user“„moralist“

Activity within the Cluster; Willingness to financially contribute

Attractiveness for the

Cluster or other Partners


Different customers by valueDiscussion

How do you distinguish between customers?

Which criterias could come into play?

What is the difference between „heavy-users“ of cluster services

versus „poor dogs / sleeping agents“ in your organization?



Fundamentals The link to value

Any business only exists if it

has a customer

In satisfying needs a business

provides value

Customers have specificneeds that have to be

satisfied

Products and servicesrepresent value to the one

with needs (the customer)

A business only exists tosatisfy specific needs

In the process of satisfyingneeds value „changes hands“


Customer profiles

Customer profiles (Who they are?)

Set of (static) attributes allowing reasonable

assumptions, e.g. „families with babies need

diapers“, „teenagers need smartphones“,

„companies with vehicle fleets need motor

insurance“

Customer behaviour (What they do?)

Based on assumptions like „beer drinkers are

more likely to choose beer over wine“ or „once

a gambler, always a gambler“


Different customer profiles require different services

KNOWLEDGE DRIVEN

Seeking for experts knowledge and

information

OUTSOURCERoutsourcing of

activities, subcontracting

SALESMANSeeking for new

sales potential and market opportunities

TEAMPLAYERCooperation &

collaboration, joint activities

NETWORKERSystem impact,

image, reputation, visibility within

network


Classification of customers

„sleeper

agent“„copy-cat“

„heavy

user“„moralist“

Activity within the Cluster

Attractiveness for theCluster or other partners

AB

DC


Contact logistics


Contact & Information

Christoph Matthias Reiss-SchmidtHead of International Projects Clusterland Oberösterreich GmbH

Tel: +43 732 79810-5157Fax: +43 732 79810-5110Mobile: +43 664 8186586E-Mail: [email protected]

Clusterland Oberösterreich GmbH supports cluster and network initiatives. It

promotes innovation through cooperation and competence in order to enhance the

competitiveness of enterprises.

All Rights reserved, especially the rights to copy, to distribute or to translate. No part of the slides may be reproduced, copied or

distributed in any form or by any means without prior written permission of Clusterland Oberösterreich GmbH.

18 June 2014© Clusterland Upper

Austria Ltd

Financing of cluster organizations

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