CASE STUDY:Centers of Excellence and Innovation (CEIs) in...
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             	                                                     	  CASE STUDY:INTRODUCING THE RCI ICT COMPETITIVENESS P...
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             	                                                     	  CASE STUDY:Tourism Development in the Western Balkan...
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RCI Case Studies

  1. 1.      CASE STUDY:Centers of Excellence and Innovation (CEIs) in South EasternEuropeTHE CHALLENGE:The transition economies of South Eastern Europe (SEE) have experienced weak ornon-existent economic growth. The countries have suffered from increasingunemployment and poverty rates. In these conditions, external investments motivatedby the relatively low production expenses have significantly decreased, and could notbe considered a driving force for increasing competitiveness in the region. Even thoughlabor and other production costs in SEE are significantly lower than in the EU, in manycases the local enterprises have lower productivity, poor management, and oldfashioned technologies.In order to improve their international competitiveness, the countries in SEE need toboost their economic growth with high value added production and services. Stimulatinginnovations, excellence, and quality is one of the prerequisites for increasedcompetitiveness and sustainable economic growth.THE INITIATIVE:In the last 6 years, the USAID-funded Regional Competiveness Initiative (RCI) programrecognized ICT in SEE as one of the sectors that can compete on local, regional, andEuropean markets, and can also significantly increase the effectiveness and efficiencyof other economic sectors through improved management processes, optimizedproduction operations and modernized technologies.In the beginning of the RCI program, the team was focused on increasing thecompetiveness of the ICT sector through process improvement and the assessment ofICT companies according to international quality models.Once a fair number of ICT companies in SEE successfully implemented internationalstandards, RCI focused on creating regional networks and promoting domesticsuppliers of local and/or customized ICT solutions (Enterprise Resource Planning,Customer Relationship Management, Facility Management, etc.) to other sectors.Case Study: Tourism Development in the Western Balkans 1  
  2. 2.      At the last stage of the program, when sustainability of the results was with the highestpriority, RCI decided to provide small grants1 for creation and development of Centersof Excellence and Innovation (CEI) in the region. The grants were provided to fivecenters that demonstrated capacity for sustainable development. These centers werelocated in Belgrade, Kragujevac, Nis, Pristine, and Skopje. They were integrated into awide-scale network of centers in the region that RCI supported through access to highlyprofessional trainings, capacity building expertise, and linkages to EU and US researchcenters and programs.    THE RESULTS:As a result, the overall network of CEI includes centers in Bitola, Banja Luka, Sarajevo,Tirana, Varajdin and other organizations, most of which are represented in the RCIregional platforms for excellence and innovation – and most of the countries in the SEE region are connected in a network of CEIsspecializing in stimulating innovations and providing services across a wide range ofpriority sectors such as Agriculture, Automotive, eGovernment, Electronics, Food-processing, Telecommunications, Tourism, and others. In order to achieve theirmission, the centers are using cutting edge methodologies and technologies from worldleaders in ICT such as Apple, Software Engineering Institute- Carnegie MellonUniversity, Microsoft, IBM, and HP, amongst others.The importance of a cross-sector approach is illustrated by the CEI in Skopje. Thecenter is designing and developing a hybrid cloud solution that will provide affordablelocal IT services for Macedonian tourism and agriculture. The portfolio of modern cloud-based services that will be used by the small agro and tourism enterprises includesERP, CRM, and web and document management systems. It is expected that thecenter will intensify the use of ICT in other sectors, and will enhance theircompetitiveness while simultaneously benefitting the ICT industry in Macedonia due tothe increased local demand of IT solutions.Another example of CEI success is the CEI in Kragujevac which promotes the use ofCAD/CAM systems for automotive industry in a region heavily dependent on the growthof automotive and related industries.With small grants for Centers of Excellence and Innovation (CEIs), RCI supported the establishment offive new centers in South Eastern Europe. In addition, RCI worked for the further integration betweenexisting CEIs created by other USAID initiatives, international donors, and businesses. The initiative hasnot only supported the ICT sector, but has also contributed to higher competitiveness within other sectors.This document is produced by USAID’s Regional Competitiveness Initiative RCI; Implemented by SEGURA PartnersLLC                                                                                                                        1 In the range of 20 -80k USDCase Study: Centers of Excellence and Innovation in South Eastern Europe 2  
  3. 3.      CASE STUDY:REGIONAL “POSTHARVEST MANAGEMENT” TRAINING INSARAJEVO, 24-28 OCTOBER 2011THE CHALLENGE:Around the developing world, an average of 40 percent of harvested agricultural productis lost before it can be consumed. Reducing this postharvest loss is usually the mosteffective way to increase the incomes of producers and other businesses in the supplychain.THE INITIATIVE:In support of the objective of reducingpostharvest loss, the United StatesAgency for International Development(USAID) Regional CompetitivenessInitiative and 10 USAID projects in tencountries cooperated to hold aregional Postharvest ManagementTraining in Sarajevo for 89 agriculturalprofessionals from Bosnia andHerzegovina, Kosovo, Albania,Montenegro, Georgia, Moldova,Macedonia, Azerbaijan, Ukraine andSerbia. In addition to the USAID Training participants during visit to local agricultural producersupport, SIDA, the Swedish  Development Agency, and CzDA, the Czech Development Agency provided funding.The course was taught by professors from the University of California at Davis. The UCDavis Post Harvest Institute is widely recognized as having among the world’s bestexperts in this subject. They provided instruction, text books, and computerized trainingmaterials for the students to use in the future. By facilitating and co-funding thisactivity, RCI reduced the cost of attending by up to 10 times per participant.THE RESULTS:This event represented a remarkable partnership among many donors and countries. Itnot only provided training for professionals, but served to promote future regionalcollaboration. This graduate school level coursework has allowed the participants toCase Study: Postharvest Management Training 1  
  4. 4.      receive training that would have been prohibitively expensive had they been required totravel to the UC Davis campus in California to receive it.The participants received instruction on how to properly manage fruits and vegetablesfollowing harvest, including temperature management, handling, packaging, transport,the use of modified atmospheres, symptoms and treatments for diseases, andnumerous other topics. They were given practical exercises in grading and productselection, and had the opportunity to visit commercial packing operations. Thegraduates are expected to return to their respective countries and train others in thetechnologies and practices they learned during this valuable course.Case Study: Postharvest Management Training 2  
  5. 5.      CASE STUDY:INTRODUCING THE RCI ICT COMPETITIVENESS PYRAMID:Process, Benefits and ResultsTHE CHALLENGE:The ICT sectors in East Europe have gone through significant transformations for the last twodecades. A shift from capital-intensive hardware production to knowledge-intensive softwareproduction has taken place simultaneously with the creation and development of private ICT sectors.The relatively well-educated human resources and the long-lasting traditions in ICT, in combinationwith the competitive labor costs have been the main success factors that contributed to the rapidgrowth of the ICT sectors in the region. However, the firms in the region, most of which are SMEs,face global competition with larger outsourcing destinations such as India, China, and Russia.Addressing Regional Challenges:Based on their experience in the region, the team at the European Software Institute (ESI) hasidentified a number of challenges facing the newly established ICT firms and immature markets in theregion. The ESI Center of Eastern Europe developed a program to effectively address thosechallenges in the region. The key challenges are summarized in the table below:Table 1: Regional Challenges, Solutions and Expected Results of Reform Challenge Solution Expected ResultsLow level of Process Implementation of cluster type of Creation of sustainableImprovement (PI) projects performed by multiple communities of practices.benefits awareness at stakeholders as public-privatefirm, national and partnership initiatives.regional levelsMost companies in the Providing measurable roadmap for Strong commitment fromSEE region are micro- customized (simplified) multiple-model all relevant stakeholdersor small-sized and process improvement implementation for an affordable,could not easily through IT Mark (ESI) service. IT Mark measurable andallocate expert includes improvement and certification achievable processresources for complex guidelines for software processes improvement program.process improvement. based on CMMI, information security processes based on ISO 27001 and business management processes based on 10sq.Case Study: RCI ICT Pyramid 1
  6. 6.      Small and Medium Co-funding from business support Providing multiple sourcesEnterprises (SMEs) are programs for increased competitiveness for funding of the initiative,not able to allocate of SMEs, step-by-step approach to including at least 30financial resources to ensure intermediate business benefits percent of the direct costsinitiate comprehensive and stronger commitment from the for SPI provided by theSPI programs. sponsors. firms themselves.Fragmented market By implementing the “ICT Creation of regional ICTwith limited experience Competitiveness Pyramid” in SEE, even brand recognized on thein PI implementation, the smallest countries in the region international and locallower visibility of receive the opportunity to benefit from markets.ICT/SW industry brand the regional brand.and capacity.THE INITIATIVE:In the framework of the RCI project, the ESI Center of Eastern Europe planned and launched theexecution of a comprehensive software process improvement program named “ICT CompetitivenessPyramid”.The goals of the program were: • To build organizational capacity for planning and execution of a process-improvement program in the ICT Sector. • To build expert capacity for process improvement using the latest management and engineering models and standards. • To help a large number of SMEs to increase their competitiveness, and promote cooperation through implementation of process improvement initiatives. • To support industry leaders in certifying their processes according the world recognized models and standards. • To expand the regional ICT market through promotion of ICT as a tool for increased competitiveness in other economic sectors.In order to achieve the Program goals, several groups of activities were planned and executed. Ashort description of each phase has been provided in the Table below. The overall program isillustrated in Figure 1.Table 2: Project Activity List Activity Group Short DescriptionGroup 1 Analysis of the ICT sector on national and regional level. IdentificationDevelopment of a of public-private partnership models, stakeholders, donors and mostbase for increased appropriate interventions.ICT competitiveness Building the fundamentals of the program and obtaining strongthrough quality commitment from stakeholders from the Government, Business and international development programs.Group 2 Capacity building through awareness, training, and certification ofBuilding awareness experts and stakeholders.and delivering Creation of management leadership and commitment. These togethertrainings in software, with the delivery of trainings in process-improvement concepts are thecorporate excellence , key drivers for a successful and sustainable process-improvementIT security and CMMI program.Group 3 Provision of technical and management support to the organizationsProcess improvement during the implementation of their improvement plans in order toprogram ensure that the improvement actions are being executed effectivelyimplementation on and efficiently.Case Study: RCI ICT Pyramid 2
  7. 7.       Activity Group Short Descriptioncluster and SME level Perform periodic quantitative and qualitative evaluations of the implementation progress, and take corrective actions when the actual performance deviates significantly from the plan in order to ensure that the organization is prepared to undergo a formal evaluation.Group 4-7 Review the processes in each organization to determine the degree ofAppraisal of the implementation and institutionalization of the selected process areasprocesses’ maturity with the objective to identify the potential gaps that must be addressed by the organization to satisfy the goals of the improvement initiative. Certification against the international standards and models.Parallel capacity-building services:Strengthening the Positioning local ICT products and services on the regional marketregional market for and developing cross-border/cross-sector cooperation in the region.ICT solutions www.IT2Business.orgStrengthening the Development of training and certification centers and training andregional capacity for certification community of practices. www.Quality2IT.orgIT quality modelsimplementationSustainability of the Establishment of a large regional network of CEIs with access toresults achieved, highly professional trainings, capacity building expertise, and/orCenters of Excellence connections to EU and US research centers and programs.and Innovation (CEIs)Strategy development Support the countries in the region with the formulation and implementation of ICT related strategies.Figure 1. Program Architecture – ICT Competitiveness PyramidCase Study: RCI ICT Pyramid 3
  8. 8.       Program Program Activities in du stry le ad er s cer tifie d o n th e la test E X Results m od els a nd stan da rd s C E L ICT L E O N R LEADERSHI P 6 ap pr aisa lp lan s 7 C G E A A N Readiness check for N I D Z A I ndicat ors of achievement: process mat urity p ro cess ma tur ity Process maturit y S T U I O •10-20% of the organizat ions* completely implement appraisals certif ication S T N and are cert ified f or t he leading industry models and A A I N L standards A B •30-40% of the organizations*part ially implement I L I T t he leading indust ry models and standards and have Y obtained intermediat e validat ion 4 5 Quick assessment of the pr ior it ized g oa ls Process Improvement O processes maturit y in a pr oce ss im pr ove me nt R IN CREASED clust er of SME s Program implement ation on G A pla ns cluster and on SME level N COM PETI TI VENESS I Z A T I O I ndicat ors of achievement: clu ste r of or gan iza tion s N A •70% of the organizat ions*increase their co mm itt ed to the L 3 C competit iveness based on more effect ive and p ro gr am A o pe rat ion al plan P A eff icient processes id ent ified C •50% of the organizat ions*gain strategic n eed for Process Improvement I T Y competit ive advantages based on continuous a war en ess Program Initiation in SMEs B U improvement of t he eff iciency and ef fect iveness of a nd t ra ining I L t heir processes le ade rs hip a nd T d ecisio n- ma ker s’ imp lem en tat io n co mm itm en t cap acit y O PR OCESS IMPRO VEMENT R CAPACI TY I N PLACE G 2 .1 2.2 A C N T I Z U A I ndicat ors of achievement: B uilding awareness and le ad ers hip a nd Creat ion of implementati on R T I E O •90% of the persons who are t rained implement init ial training d ecisio n- ma ker s’ capacit y – professional I N N co m mitm en t training and certif ication P A L good practices in their work L I •80% of the organizations*use t he good pract ices t o A N pr og ra m C F R i mprove thei r processes E A infr ast ru ctur e S •65% of the organizations*launch init iative f or in p la ce T 1 R cont inuous process improvement U - Development of the base for increased I CT *Percentage are indicat ed against the initial number of organizations competitiveness t hrough OR GA N I A T I - A L I N F A S T R U Results orient ed t owards building of organizat ional capaci ty C T U R E I N P L A E qualit y Z ON C Results oriented t owards increased com itiveness of the ICT sector pet R R E MR E E T P OCS I P OV MN CAAI I NL CE P CT P A YSustainable Financial ModelOne of the major objectives of RCI is to ensure sustainability of the ICT activities, and to obtaincommitment for the latter from other stakeholders in the region as well. To achieve that end, thevarious project activities receive different levels of funding: • The initiation activities such as awareness, elaboration of analyses and studies, project planning and management are almost completely funded by RCI (80-100 percent). • Human resources strengthening activities such as training and qualification are funded in cooperation with other business support programs and the firms that benefit from the respective trainings. The RCI contribution in these activities is in the range of 30-50 percent. • Certification and consultancy activities provided to the firms in the region are supported up to one third by RCI. • As soon as the programs are successfully piloted in a certain country, external - in many cases non-USAID - funds are used in order to ensure continuation of the programs initiated by RCI.Utilizing the Global Software Development Models for Increased ICT Competitivenessin Eastern EuropeThe launch of the program afforded an important opportunity for small firms and new entrepreneurs:the opportunity to build effective cooperation based on quality, using the latest models fororganization and management of software engineering processes such as Capability Maturity ModelIntegration (CMMI). The CMMI model is well recognized by the ICT leaders as the de facto standardCase Study: RCI ICT Pyramid 4
  9. 9.      for advanced software development and delivery of complex ICT services. The complexity of theproducts and the influence of internal and external requirements and pressures indicate that, in thefuture, organizational prosperity will be highly influenced by the willingness of the organizations in theregion to address process improvement across the entire product development life cycle – fromconception through delivery and maintenance. Getting the people-process-technology triad working at“its best“ is a must for those organizations in the region that want to compete on the global market.Through CMMI process improvement, organizations could gain five primary types of benefits:• Cost: reduction in the cost to find and fix a defect; improved average costs for software development;• Schedule: increased percentage of milestones met and predictability of meeting schedules;• Quality: improvement in quality, related to reducing defects over time or across product life cycle;• Customer Satisfaction: recognition on the global market, improved customer satisfaction and increased client base;• Return on Investment: positive return on investment from CMMI-based process improvement.In many cases, CMMI is considered a strong advantage for subcontracting in the value chain ofmultinational corporations such as Boeing, Siemens, Motorola, Toyota, General Motors, JPMorgan,and government agencies such as the Department of Defense and the Department of Energy.Therefore, CMMI implementation is an important step towards increased competitiveness on theglobal market for high-quality software solutions.Another important aspect of effective cooperation based on quality is the ability to effectively lead andcoach development teams. Therefore, in the course of the program, the team of ESI Eastern Europestarted introducing companies from the region to the concept of how to manage projects quantitativelyin order to complete projects on schedule, within budget, and with all requirements met. Through theuse of the Team Software Process (TSP), leaders are given an example of both a strategy and a setof operational procedures that use disciplined software process methods at the individual and teamlevels.THE RESULTS:The boom in the development of the ICT has changed South East Europe’s image from a destinationwith resellers and testers to a destination offering products and/or services, and brought benefits atthe firm and regional levels.Firm level benefitsFour main types of business models are used by the firms supported by RCI. The softwareimprovement program was aligned with the specific objectives of the business model used by a givencompany. • Cost-efficient software outsourcing The outsourcing model is used by companies focused primarily on software development based on well-defined client requirements. The main competitive advantage is the cost efficiency of the production. Companies are able to produce high quality software at a lower cost compared to the development prices in other locations. There are companies following this model in their architecture design and management activities, but the majority uses it for the development of product parts/modules according to the requirements defined by the client. The RCI SPI program has enabled companies to provide efficient and effective outsourcing services using this model.Case Study: RCI ICT Pyramid 5
  10. 10.       • Value-added software development and partnership This business model includes activities targeting the complete life-cycle development process for the clients such as business analysis requirements development, software development, testing, and deployment. The companies using this business model are focused on bringing value or improving the business productivity of the solution and not just in the software development. The SPI program has supported those firms to be able to optimize the production and design process for small projects (around 8 – 30 developers), integrate their teams into large-scale projects, and complete separate activities in correspondence with the overall project implementation process. • Own products In addition to outsourcing and value-added services, some of the companies that were supported by the RCI activities developed and marketed their own products such as ERP systems for small businesses in specific economic sectors, banking systems, CRM systems, document management, web design and others that targeted local or regional market niches. Many of the companies had leading positions in their market niche in the region. The RCI ICT program supported those firms in optimizing the development process and improving the positions of their products. • System integrators and consultants A few of the participants in the SPI activities were system integrators building relatively complex IT systems. RCI activities were aimed towards improvement of the processes related to value added services such as deployment and support of ICT systems.The ESI Center of Eastern Europe conducted a special survey among the companies thatparticipated in the SPI program (2006-2009). Twenty-two companies from Armenia, Bulgaria, Bosniaand Herzegovina, Croatia, Macedonia, Romania, and Moldova participated in the survey. All of thefirms were small- average number of employees per company was 57, and 9 of the companies hadless than 25 employeesThe survey included CMMI and ITMark certified companies, companies that were in the process ofCMMI and ITMark certification, and companies that didn’t manage to fulfill all the requirements forITMark certification at the time of the interview. The questionnaires were filled out by senior managersor owners of the companies.The conclusions of the survey are summarized below:• 82 percent of the companies increased their competitiveness by more than 20 percent• 85 percent of the firms reported increased client satisfaction and 58 percent of the companies reported decreased “time to market”• 37 percent of companies reported sales increase of 20-50 percent due to the CMMI/ITMark implementation programEach company that participated in the survey highlighted specific benefits related to their ownbusiness. Examples of such benefits were: • Company 1 (Macedonia) – development and implementation of ERP solutions o “ The most visible result we have seen is having real-time reporting on what is really happening within our company. Our managers have online access to all of their projects and can instantly see which tasks are on time, which are lagging behind schedule so they can push the team or add more resources to the team to get the task done on time.” o “Processes are planned, documented, performed, monitored and controlled at the project management level.” o “The pressure created by insufficiently well defined requirements was decreased and we reduced the time needed for their implementation.”Case Study: RCI ICT Pyramid 6
  11. 11.       o “Before the ITMark implementation “the deadlines were set only as a wish”, because they could not be objectively estimated”. o Subsequently the company continued its SPI initiative and achieved advanced ITMark certification. • Company 2 (Moldova) – development and implementation of banking systems “When implementing ITMark and as recommended by CMMI we introduced a new practice in our work with Banks: When we receive requirements we create a prototype of our vision of the product and then discuss it again with the client. In 80 percent of the cases our vision appeared to differ a lot from the client’s vision. Previously this created a lot of rework. Now we can assure a correct vision of the requirements and final product that are understood correctly by us and the clients.” • Company 3 (Bulgaria) – a small Bulgarian IT company, offering a broad range of hardware and software solutions o The company has received a number of awards over the years, in particular from their main client – a big multinational company. o The company has been working with the ESI Center of Eastern Europe with the objective of reaching CMMI Maturity Level 2. o To keep the company’s clear and strategic business objectives at the forefront of all activities during the complete SPI initiative, the ESI Center of Eastern Europe suggested carrying out an intermediate evaluation based on ITMark. The evaluation helped the company to sustain and further develop its business with its main client- a division of Siemens. o The Company passed all the three areas of the ITMark evaluation and was CMMI certified.Regional level benefitsOne of the most important results from the “ICT Competitiveness Pyramid” approach on the regionallevel was that the companies and associations from different countries in the region covered by RCIcreated a regional community of practice and launched several joint initiatives in order to increase theICT competitiveness of the whole region. With the support of RCI, the associations which had initiallyrecognized and committed to the pyramid model such as the Bulgarian Association of SoftwareCompanies (BASSCOM), and the Macedonian Association of ICT Companies became regionalleaders in the promotion of ICT competitiveness. They were able to launch regional projects in whichto transfer their experience to other associations in the region. ICT Indicators 2005-2013In 2009, RCI started new regional activities aimed at enlarging the regional market for IT solutions,developing training and certification networks, and building the foundation of the “ICTCompetitiveness Pyramid” in new countries such as Georgia and Ukraine.Case Study: RCI ICT Pyramid 7
  12. 12.       Table 3: ICT Pyramid ResultsGENERAL CORRESPONDING ESI CEE Cumulative totalELEMENT/INDICATOR INDICATORS 2005- 2013 February ESI Eastern Europe and related organizations No of SMEs that participated inNumber of firms receiving CMMI/ITMark, PM and other 520USG assistance to professional trainings;improve their management Organizations attending eventspractices where ESI presented RCI 2304 activities No of SMEs that participated in CMMI/ITMark trainings and practical workshops; No of SMEsNumber of firms receiving in the IT Business SolutionsUSG assistance to invest 586 Network;in improved technologies No of SMEs in the IT Training and Certification Network IT awareness events participants 4920 - individuals IT awareness events participants 2304 - organizations IT events - awareness, training, assessments, workshops, 224 practical in-house, etc. This document is produced by USAID’s Regional Competitiveness Initiative RCI; Implemented by SEGURA Partners LLC Case Study: RCI ICT Pyramid 8
  13. 13.      CASE STUDY:Tourism Development in the Western BalkansTHE CHALLENGE:Western Balkans is a region rich in globally significant cultural and natural assets. Thecompetitiveness of this region as a travel destination lies in its rich historical heritage,authentic culture and well-preserved nature. The image of an undiscovered part ofEurope sprinkled with historical sites, stunning landscapes, and authentic communitiesattracts travelers interested in exploration and off-the-beaten-path experiences. Whileeach individual country has a lot to offer, the joint marketing of the Western Balkans asone destination enhances the competitiveness of the entire region. For many travelers,especially those from distance starting destinations, the ability to combine two or morecountries into one itinerary based on specific interests or convenience is a large factorin the ultimate purchase decision.Unfortunately, uneven economic development, socio-political dynamics associated withthe break-up of former Yugoslavia, and severe military conflicts in some of the countrieshas made cooperation in the region difficult. To function as one integrated traveldestination (as frequently desired from the demand perspective) countries in the regionhad to establish effective cooperation to develop joint tourism products (cross-borderroutes, common themes, joint attractions, etc.), deliver authentic regional experiencesand market themselves as one destination.Tourism and the Local Context:According to the recently updated long-term outlook and assessment of future tourismtrends produced by the UN World Tourism Organization (UNWTO), the number ofinternational tourist arrivals worldwide is expected to increase by an average of 3.3percent per year from 2010 to 2030. This represents some 43 million more internationaltourist arrivals every year, reaching a total of 1.8 billion arrivals by 2030. Europe hasconsistently been the biggest generator of international arrivals and is expected toaccount for more than 45 percent of arrivals in 2020, maintaining an average growthrate of 6.5 percent. While Northern and Western Europe have seen much slower growthin recent years (Northern Europe: 5 percent in 2011; Western Europe: 3 percent in2011), Central/Eastern Europe and Mediterranean Europe have been the maingenerators of growth on the continent (percent in 2011).The power of tourism lies in its significant economic impacts. According to the WorldTravel & Tourism Council (WTTC) and Oxford Economics, in 2011, tourism generated 9percent of the global GDP. One in every twelve jobs (255 Million in total) around theglobe is supported by tourism. This is 6 times more than the global automotive industry,4 times more than the global mining industry and a 1/3 more than the global financialindustry. In Europe tourism is the biggest employer, exceeding the auto industry by afactor of 3.Case Study: Tourism Development in the Western Balkans 1  
  14. 14.       Based on The World Bank publication “Transformation through Tourism Harnessing Tourism for Growth and Improved Livelihoods” Source: The World Bank, Transformation through Tourism (2012)The deep political and economic reforms in the last two decades have created a lot ofchallenges for WB economies. In many countries, historically important industries havedeclined due to lost markets or economic restructuring. This has led to vastunemployment, increased poverty, and economic decline of entire regions (Table 1).Agriculture remains an important source of living but it is mostly fragmented, inefficientand uncompetitive.Table 1: Unemployment and poverty figures for WB countriesCountry Unemployment Population below (2011)* poverty lineAlbania 13.3% 12.5% (2008)Bosnia & Herzegovina 43.3% 18.6% (2007)Kosovo 45.3% 30% (2011)Macedonia 31.4% 30.9% (2011)Montenegro 11.5% 6.6% (2011)Serbia 23.4% 9.2% (2010)Note: *Some of the figures might be exaggerated due to hidden unemployment.Source: CIA FactbookCase Study: Tourism Development in the Western Balkans 2  
  15. 15.      To counterbalance their serious socio-economic challenges, Western Balkan countriespossess a wealth of natural and cultural assets. They are home to ten UNESCO WorldHeritage Sites, vast areas of protected lands with habitats of rare or indigenous animaland plant species, ancient and colorful traditions, arts, rituals and other intangiblecultural heritage (some of which is also included in UNESCO ICT List). Despite theglobally recognized value of these assets, some of them have been subject to poormanagement due to limited funds and lack of capacity. The problem is exacerbated bylow public awareness and poverty-driven illegal activities such as poaching, felling,treasure hunting, etc. Amidst this complex combination of challenges, many valuableassets with potential of becoming vibrant tourism attractions remain underutilized andhidden for the world traveler. The lack of development of these is also associated withmissed opportunities for revenue generation and other benefits for local stakeholders.In summary, the major challenge for Western Balkans countries was to overcomedifferences and find a way to collaborate to benefit from the opportunity that the wealthof natural and cultural assets offers. The tourism industries in the countries needed toexpand their thinking and connect with partners in neighboring countries to begin joiningtheir offerings in a regional sustainable tourism portfolio. In addition, they needed tobegin positioning themselves as one singular destination that invites travelers forexploration and adventure.THE INITIATIVE:Numerous past initiatives to cooperate in tourism have failed in the past. It was hard tobring two countries around the table, let alone all six Western Balkans countries. Thesupport of the United States Agency for International Development (USAID) RegionalCompetitiveness Initiative (RCI) Project facilitated the establishment of a regionalnetwork of tourism stakeholders who began to realize the value of exchanging bestpractices and working together. This was a very important first step. Members of theregional network began to realize the importance of cooperation and to see the value ofpromoting the region together. Multiple meetings and discussions were held andfacilitated to achieve that end, but reaching an agreement on how to make it happenwas difficult. Another difficulty was thatregional initiatives attracted manyrepresentatives of donor programssupporting tourism, but rarely motivatedactive engagement and commitment fromthe private sector.What was needed was an initiative soappealing and motivating for allstakeholders in the region that they wereready to put all differences aside andunite efforts. It needed to be an Regional Tourism Steering Committee Meetingopportunity that was of interest to the Podgorica, December 2011private sector to ensure real involvementof the industry.Case Study: Tourism Development in the Western Balkans 3  
  16. 16.      In the course of facilitating the search for such a uniting initiative, the RCI team cameacross the opportunity to develop a promotional insert for the National GeographicTraveler magazine. The National Geographic brand is globally recognized andassociated with values that all tourism stakeholders in the region related to. At the sametime, the audience of the National Geographic Traveler magazine corresponded to theprofile of the travelers that all countries in the region were trying to target. This becamethe opportunity that brought all interests together. Stakeholders from the region beganworking together to facilitate the development and publishing of the insert. The activitywas partially funded by RCI/ USAID, but requiredadditional investment and active involvement from eachof the participating countries. The process was notwithout difficulties and challenges, but ultimately, thesupplement was produced. It was officially presented atdifferent events, but most importantly it was included asa promotional insert of the magazine, reaching over225,000 subscribers from the UK, Germany, and theNetherlands.Because the National Geographic brand was whatefficiently brought Western Balkans countries together,the RCI program saw value in continuing thecooperation with the organization. The next opportunityto cooperate with National Geographic for the benefit ofthe joint promotion of the region was to support the First Page of the promotionaldevelopment of an online MapGuide for the Western insert for the NationalBalkans ( The idea of Geographic Traveler Magazinethe MapGuide was to serve as an integrated platformthat promotes the region as a single destination, and enables travelers to plan trips thatreveal the authentic spirit of Western Balkans countries. If implemented well, it wouldbecome an effective market-access tool for authentic anddistinct travel experiences withinthe region. As all activitiesinvolving National Geographic,this program had to be based onthe values and mission of theorganization. This meant that theMapGuide program naturallyfacilitated stronger commitment tothe principles of sustainability atthe regional and country levels.Another important aspect wasthat the MapGuide featuredauthentic tourism attractions andsmall, local tourism service Screenshot from the Home page of the Western Balkansproviders who are the true Geotourism MapGuide Portalcarriers of the local spirit. ThisCase Study: Tourism Development in the Western Balkans 4  
  17. 17.      meant that the platform was empowering smaller tourism service providers generallyhave very limited market access.Given all of these benefits, regional stakeholders were ready to commit to the initiative.Again, the main financial support was coming from RCI/ USAID, but each of thecountries was expected to contribute additional funding and to actively participate. Theprocess of planning and developing the MapGuide was facilitated by NationalGeographic’s team, and took regional stakeholders through a planning phase(generating ideas and designing a plan of action), a nomination phase (generatingnominations for attractions and service providers to be featured on the MapGuide, andensuring that they adhere to the sustainability principles of National Geographic), and alaunch phase (official launch of the MapGuide and raising awareness among thebroader public). Throughout the program, local stakeholders were also exposed totrainings to raise awareness of the geotourism principles at the core of NationalGeographic’s value system. National Geographic defines geotourism as:“…tourism that sustains or enhances the geographical character of a place – itsenvironment, culture, aesthetics, heritage, and the well-being of its residents.”National Geographic encourages the adoption of geotourism strategies around the worldas part of its mission to “inspire people to care about the planet.” By working withstakeholders in the Western Balkans, the organization facilitated increased recognition ofthe value of the region’s natural and cultural assets. Adherence to geotourism principleswas the main criteria for nominations in the MapGuide. This stipulation efficientlyoperationalized the importance of sustainable management of cultural and naturalresources.THE RESULTS:The Western Balkans National Geographic MapGuide portal was launched in June2012. Working with National Geographic made regional stakeholders focus on theopportunity of promoting their region under the National Geographic brand and forgetabout many of the differences they have had in the past. There are several importantresults that this activity produced:Facilitate productive regional cooperationAs described earlier, the value of working together was something that manystakeholders in the region understood. The regional network and different joint activitiessupported by RCI/USAID helped make some progress, but something really powerfulwas needed to reach a “tipping point.” The National Geographic brand proved to havethat power. By inviting National Geographic into the process, and supporting thedevelopment of the insert and the MapGuide, RCI/ USAID secured the unification ofregional stakeholders. The shared desire to be globally promoted by the NationalGeographic brand was more important to WB countries than the differences they had.The regional tourism network has existed as a mechanism for cooperation for sometime before the aforementioned activities. The MapGuide program facilitated thecreation of a second mechanism for regional cooperation – the WB GeotourismCase Study: Tourism Development in the Western Balkans 5  
  18. 18.      Stewardship Council. Project activities were entirely based on joint efforts through thesemechanisms, so now the tourism industry in the region has two operational and activemechanisms that continue to be effective means for cooperation towards the betterpositioning of the region as a competitive travel destination. The established cross-country group that worked together on the MapGuide continues to function as an entitythat plans and undertakes cooperative initiatives to promote the region on internationalmarkets.Involve private sectorOne of the main challenges in facilitating regional cooperation was motivating theprivate sector to join in on cooperative efforts. In many cases, regional cooperationinitiatives attracted private sector representatives, but never to the extent of taking thelead and investing time and resources. The value of being part of an initiative supportedby National Geographic generated interest in the private sector. In addition, the fact thatthe MapGuide became a platform that enabled market access for local businesses thatwere committed to the authentic spirit of the region energized many tourismentrepreneurs and business owners. During the implementation of the MapGuideprogram, private sector representatives were engaged, and eventually started takinglead in the planning and coordination activities.Facilitate Recognition and Prominence for Local AssetsAn important challenge addressed during the implementation process was the limitedrecognition of the many valuable cultural and natural assets of the region. By putting thespotlight on the authentic and the local, the MapGuide program generated morefocused attention on the value and hidden potential of underutilized cultural and naturalattractions. One of thecontinuing roles of theCouncil during the project andnow continues to be theidentifying, recognizing, andclassifying of such sites.Generate buzz andpromotionThe launch of the onlineportal was marked with aseries of promotional eventsin Washington DC, planned Photo from the Western Balkans Exhibition at Farragut Park Square,and implemented by RCI June 2012, Washington DC(USAID), NationalGeographic, and tourism stakeholders from the Western Balkans region. Promotionalevents included an evening reception at the headquarters of National Geographic, openair exhibitions in downtown Washington, DC and exhibitions at the USAIDheadquarters. At least 2000 people were exposed to the regional promotion. Thepromotional events generated word of mouth and active media coverage (at least 3country- and regional-level televisions, and more than 10 newspapers and online-mediasources).Case Study: Tourism Development in the Western Balkans 6  
  19. 19.      Generate momentum for next stepsOne of the most important results of the partnership with National Geographic was thegenerated momentum in regional cooperation in to promote the Western Balkans. Theexcitement that accompanied the launch of the MapGuide, and the enthusiasm of thepeople who attended some of the promotional activities (exhibitions, receptions, etc.) inWashington, DC inspired regional partners to begin looking for new and interestingways to work together and promote the region. Council members continue to be inregular communication, and are beginning to utilize contemporary means (such associal media) for promoting the MapGuide and regional travel.This document is produced by USAID’s Regional Competitiveness Initiative RCI; Implemented bySEGURA Partners LLC www.RCIProject.comCase Study: Tourism Development in the Western Balkans 7